The Business School at Eastern College

| June 12, 2016

Question

The Business School at Eastern College is accumulating data as a first step in the preparation of next year’s budget development. One cost that is being looked at closely is administrative costs as a function of student credit hours. Data on administrative costs and credit hours for the past thirteen months are shown below:

Administrative Credit
Month Costs Hours
July $ 129,348 199
August 82,589 100
September 225,988 1,407
October 216,797 997
November 257,934 1,351
December 184,723 1,124
January 218,737 1,331
February 245,240 1,379
March 209,285 1,022
April 191,714 1,178
May 249,487 1,414
June 170,319 426
July 127,675 270
Total $ 2,509,836 12,198
Average 193,064 938

The controller’s office has analyzed the data and has given you the results from the regression analysis:

Regression Statistics
Multiple R 0.9319141
R Square 0.868463890
Adjusted R Square 0.856506062
Standard Error 20,107.77568
Observations 13

Anova
df SS MS F Significance F
Regression 1 29,364,831,978 29,364,831,978 72.6272261 3.56301E-06
Residual 11 4,447,549,069 404,322,642.6
Total 12 33,812,381,047

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper
Intercept 100,624.20850 12,196.70903 8.25011142 4.86877E-06 73,779.43291 127,468.9840 73,779.43291 127,468.9840
X Variable 1 98.5178956 11.56020133 8.522160882 3.56301E-06 73.07406399 123.961727 73.07406399 123.961727

If the controller uses regression analysis to estimate costs, the cost equation for administrative salaries is:

Order your essay today and save 30% with the discount code: RESEARCHOrder Now