Question:
The Rapid Engine Company is a multi-national manufacturer os small gasoline and Diesel motors. Rapid hs estimated the following cost experience for a new 3.5hp engine over a sample of 122 observations.
COST = $8,500 + $32 OUTPUT
Predictor Coef Stdv t Ratio
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Constant 8,500 5,000 1.7
OUTPUT 32 8 4.0
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SEE = $2,500, R2 75% R2 74.5%
Where COST is the dependant variable and OUTPUT is the independent variable
A. Fully interpret these simple regression results using all the statistical information supplied
B. Describe this cost category as a fixed or variable based upon the simple regression results described above.
C. How might Rapid improve the value of this regression as a sales predictor.