Answer:
(1) [tex]\text{Total Cost}=1246.67+7.60\ \text{Volume}[/tex]
(2) The variable cost per unit produced is $7.60.
(3) The coefficient of determination is 0.96 or 96%.
(4) The estimated total cost is $5,046.67.
Explanation:
A regression analysis for the provided data is performed on Microsoft Excel.
The output is attached below.
(1)
The estimated regression equation that could be used to predict the total cost for a given production volume is:
[tex]\text{Total Cost}=1246.67+7.60\ \text{Volume}[/tex]
(2)
The variable cost per unit produced is given by the slope of the line.
The slope of a regression line represent the value of the dependent variable for one unit of the independent variable.
So, the variable cost per unit produced is $7.60.
(3)
Consider the regression output attached.
The coefficient of determination is 0.96 or 96%.
This implies that the percentage of the variation in total cost that can be explained by production volume is 96%.
(4)
For Volume = 500 units predict the total cost as follows:
[tex]\text{Total Cost}=1246.67+7.60\ \text{Volume}[/tex]
         [tex]=1246.67+(7.60\times 500)\\\\=1246.67+3800\\\\=5046.67[/tex]
Thus, the estimated total cost is $5,046.67.
