Reference no: EM132666865

The manager of the main laboratory facility at Elmhurst Health Center is interested in being able to predict the overhead costs each month for the lab. The manager believes that total overhead varies with the number of lab tests performed but that some costs remain the same each month regardless of the number of lab tests performed. The manager of the main laboratory facility at Elmhurst Health Center collected the following seven months of data.

The number of tests performed and the total monthly overhead costs for the lab follow:

Month                Number of Lab Tests Performed             Total Laboratory Overhead Costs
August                3,350                                                     $ 23,500
September          3,700                                                     $ 27,550
October           3,650                                                          $ 24,500
November             3,450                                                    $ 26,400
December              4,200                                                  $ 28,500
January              2,500                                                     $ 22,800
February            3,800                                                    $ 25,350

Problem 1: Run a regression analysis using data for August through February. Determine the lab's cost equation (use the output from the regression analysis you performed using Excel).

Problem 2: Determine the R-square using the Excel output you obtain.

Problem 3: Predict the lab's total overhead costs for the month if 3,500 tests are performed