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Simple Regression for Rapid Engine Company

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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
_______________________________________________________
Constant 8,500 5,000 1.7
OUTPUT 32 8 4.0
__
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.

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