Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Overhead Costs Billable Hours
395000 2000
440000 3000
460000 4000
513000 5000
580000 6000
605000 7000

 

Develop a simple linear regression model between billable hours and overhead costs.
 
Overhead
Costsequals=enter your response hereplus+left parenthesis nothing right parenthesisenter your response heretimes×Billable
Hours
​(Round the constant to one decimal place as needed. Round the coefficient to four decimal places as needed. Do not include the​ $ symbol in your​ answers.)
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Follow-up Question
Interpret the coefficients of your regression model.​ Specifically, what does the fixed component of the model mean to the consulting​ firm?
 
Interpret the fixed​ term,
b 0b0​,
if appropriate. Choose the correct answer below.
 
 
A.
It is not appropriate to interpret
b 0b0​,
because its value is the predicted billable hours for overhead costs of 0​ dollars, but the firm cannot have overhead costs of 0 dollars associated with a client.
 
B.
The value of
b 0b0
is the predicted overhead costs for 0 billable hours.
 
C.
It is not appropriate to interpret
b 0b0​,
because its value is the predicted overhead costs for 0 billable​ hours, but someone with 0 billable hours would not actually be a client of the firm.
 
D.
For each increase of 1 unit in billable​ hours, the predicted overhead costs are estimated to increase by
b 0b0.
 
E.
The value of
b 0b0
is the predicted billable hours for an overhead cost of 0 dollars.
 
F.
For each increase of 1 unit in overhead​ costs, the predicted billable hours are estimated to increase by
b 0b0.
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Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question
Interpret the coefficients of your regression model.​ Specifically, what does the fixed component of the model mean to the consulting​ firm?
 
Interpret the fixed​ term,
b 0b0​,
if appropriate. Choose the correct answer below.
 
 
A.
It is not appropriate to interpret
b 0b0​,
because its value is the predicted billable hours for overhead costs of 0​ dollars, but the firm cannot have overhead costs of 0 dollars associated with a client.
 
B.
The value of
b 0b0
is the predicted overhead costs for 0 billable hours.
 
C.
It is not appropriate to interpret
b 0b0​,
because its value is the predicted overhead costs for 0 billable​ hours, but someone with 0 billable hours would not actually be a client of the firm.
 
D.
For each increase of 1 unit in billable​ hours, the predicted overhead costs are estimated to increase by
b 0b0.
 
E.
The value of
b 0b0
is the predicted billable hours for an overhead cost of 0 dollars.
 
F.
For each increase of 1 unit in overhead​ costs, the predicted billable hours are estimated to increase by
b 0b0.
Solution
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by Bartleby Expert
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