Midose\'s Stables used two different independent variables (trainer hours and nu
ID: 3171846 • Letter: M
Question
Midose's Stables used two different independent variables (trainer hours and number of horses) in two different equations to evaluate the cost of training horses. The most recent results of the two regressions are as follows:
Trainer's hours:
Variable
Coefficient
Standard Error
tminusValue
Constant
$1,004.65
$217.93
4.61
Independent Variable
$22.99
$3.23
7.11
r2 = 0.56
Number of horses:
Variable
Coefficient
Standard Error
tminusValue
Constant
$5,240.95
$1,180.40
4.44
Independent Variable
$951.48
$271.85
3.50
r2 = 0.63
What is the estimated total cost for the coming year if 15,000 trainer hours are incurred and the stable has 350 horses to be trained, based upon the best costdriver?
Variable
Coefficient
Standard Error
tminusValue
Constant
$1,004.65
$217.93
4.61
Independent Variable
$22.99
$3.23
7.11
r2 = 0.56
Explanation / Answer
What is the estimated total cost for the coming year if 15,000 trainer hours are incurred and the stable has 350 horses to be trained, based upon the best costdriver?
Substituting Trainer hours = 15000 in equation 1, we get
Y = 1004.65 + 22.99*15000
Y = 345854.65
Substituting Number of horses = 350 in equation 2, we get
Y = 5240.95 + 951.48*350
Y = 338258.95