Suenos Manufacturing company,using 12 months of data on purchasing cost and number of purchase orders, ran a regression equation that yielded the folowing information on the intercept, X variable 1, and standard error. )all regression results have been rounded to the nearest cent.
- Intercept: 16,403.85
- X variable 1: 11.69
- Standard Error: 476.58
Suenos Manufacturing Company estimates that 430 purchase orders will be processed next month and wants to know the interval into which the actual value will fall with a 95 percent confidence level. ( A table of selected values of the t distribution is found in Exihibit 3-14, cornerstones of cost accounting)
Table of selected values: t Distribution*
Values are based on the assumption that two tails are improtant-as tehy would be with confidence intervals and hypothesis test of regression coefficients. for values avobe 30, simply use teh las row.
Required:
1. Determine the appropriate t-statistic value from exihibit 3-14 for constructing Suenos Manufacturing Company's confidence interval.
2. Suenos manufacturing company estimates that next month will have 430 purchase orders. construct a 95% confidence interval around the predicted value for materials handling cost.
3.What if Suenos Manufacturing wanted a 90% confidence level? will the confidence interval be larger or smaller than the calculated in the requirement 2? construct a 90% interval.