A company would like to estimate its total cost equation usingcustomer records.  The company has randomly sampled 28customer records. Each customer record contains a Customer #, theOrder Size, and the Total Cost of the Order.  The analystremembers from accounting and economics classes taken in collegethat

TOTAL COST = Fixed Costs + Variable Cost per Unit *OrderSize.

The analysis sees that this is a linear relationship where theTOTAL COST depends on the Fixed Costs, which do not depend on ordersize, and a variable cost per unit, which is multiplied by theOrder Size.  The analysis decides to use simple linearregression to estimate the firm’s Total Costfunction.  Use the data file, Estimating aTotal Cost Regression Model.xlsx to answer thefollowing questions

1. Develop a 95% confidence interval for the true average unitvariable cost. (Look at the regression output produced by Excel forpart b.)
2. What percent of the variation in monthly total costs is“explained” by the regression model with monthly production outputas the explanatory variable? (Look at the regression outputproduced by Excel for part )
3. Suppose the plant manager is interested in estimating themean total costs for several months whereoutput is 30,000 units (i.e., Xp = 30) each month. Develop a 95%confidence interval for the mean total costs for months thataverage 30,000 units of output.

Customer #	Order Size (Quantity)	Total Cost of Order
10211	28	1631
10212	31	1923
10213	43	2070
10214	47	2392
10215	32	1886
10216	43	2307
10217	25	1486
10218	46	2448
10219	41	2210
10220	48	2401
10221	29	1860
10222	32	1786
10223	49	2485
10224	44	2203
10225	33	1855
10226	46	2380
10227	42	2102
10228	31	1683
10229	30	1706
10230	35	1955
10231	34	1992
10232	33	1926
10233	27	1852
10234	32	1807
10235	31	1880
10236	42	2134
10237	39	1979
10238	36	1882