Chapter 6, Problem 42P

Refer to the original data in the preceding problem for Martha’s Vineyard Marine Supply. Required:

1. 1. Build a spreadsheet: Construct an Excel spreadsheet and use the Excel commands to perform a least-squares regression. Estimate the variable- and fixed-cost components in the company’s material-handling department costs.
2. 2. Write the least-squares regression equation for the department’s costs.
3. 3. Predict the firm’s material-handling department’s costs for a month when 2,300 units of activity are recorded.
4. 4. Why do the three cost predictions computed in this and the preceding problem differ? Which method do you recommend? Why?
5. 5. Build a spreadsheet: Use your Excel spreadsheet from requirement (1) to compute the R² value for the regression. Interpret the R² value.