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Data Input Hours of Month Operation Utility Cost

The document shows hours of operation and utility costs for an airport over 6 months. A least squares regression analysis finds the monthly fixed cost to be $501 and the variable cost per hour of operation to be $2.02. The regression equation for total monthly cost is the fixed cost plus the hours of operation multiplied by the variable cost per hour. The R2 value for this regression is 0.95, indicating a strong fit of the data to the regression line.

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Nour Sawafta
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33 views

Data Input Hours of Month Operation Utility Cost

The document shows hours of operation and utility costs for an airport over 6 months. A least squares regression analysis finds the monthly fixed cost to be $501 and the variable cost per hour of operation to be $2.02. The regression equation for total monthly cost is the fixed cost plus the hours of operation multiplied by the variable cost per hour. The R2 value for this regression is 0.95, indicating a strong fit of the data to the regression line.

Uploaded by

Nour Sawafta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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DATA INPUT

Hours of
Operation
550
600
700
500
450
400

Month
January
February
March
April
May
June

Utility Cost
1,620
1,700
1,900
1,600
1,350
1,300

SOLUTION
3. Least- squares regression:

Fixed- and variable-cost components:*


Monthly fixed cost (intercept):

501

Variable cost (slope):

2.02 per hour of operation

* The intercept parameter (a) computed above is the cost per month.
The slope parameter (b) calculated above is cost per hour of operation.
3. Least-squares regression equation for the airport's costs:
Total monthly cost=

501

2.02 per hour of operation

501

2.02

4. Cost prediction:
Total monthly cost=
5. Calculation of R2:
R2:

0.9517761

300

$ 1,107

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