Exercise 11.44 Unsafe Insurance Company
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Unsafe Insurance Company needs to forecast its personnel department costs. The following output was obtained from a regression program used to estimate the department's costs as a function of the number of employees:
SUMMARY OUTPUT
Dependent variable = Personnel costs
Regression Statistics
R-square 0.7255
Standard error 612.0926
Observations 24
Independent Variable Coefficients Standard Error T -Statistic
Intercept 8,421.441 2,687.979 3.133
Employees 492.703 164.949 2.987
Monthly data for the past two years were used to construct these estimates. Cost relationships are expected to be the same for the coming period.
Required
1. What are the estimated personnel costs for 4,200 employees?
2. (Appendix A) How confident are you that a significant cost-driver relation exists?
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Solution Summary
Unsafe Insurance Company needs to forecast its personnel department costs. The following output was obtained from a regression program used to estimate the department's costs as a function of the number of employees:
Solution Preview
Exercise 11.44
Unsafe Insurance Company needs to forecast its personnel department costs. The following output was obtained from a regression program used to estimate the department's costs as a function of the number of employees:
SUMMARY OUTPUT
Dependent variable = Personnel costs
Regression Statistics
R-square 0.7255
Standard error 612.0926
Observations 24
Independent Variable Coefficients Standard Error T -Statistic
Intercept 8,421.441 2,687.979 3.133
Employees 492.703 164.949 2.987
Monthly data ...
Purchase this Solution
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