Question

A company want to find out if there is a linear relationship between indirect labor expense (ILE), in dollars, and direct labor hours (DLH). Data for direct labor hours and indirect labor expense for 25 months are given. Based on your results, If direct labor hours (DLH) increases by one hour, the indirect labor expense (ILE), on average, increases by approximately how much?

DLH(X) ILE(Y)
20 361
25 355
22 376
23 384
20 374
19 311
24 427.2
28 387.5
26 450.8
29 475.2
27 462.6
22 333.3
26 389.9
25 445

Answer 1

11.88571

Explanation:

Given the data :

DLH(X) :

20

25

22

23

20

19

24

28

26

29

27

22

26

25

Y:

361

355

376

384

374

311

427.2

387.5

450.8

475.2

462.6

333.3

389.9

445

Using a linear regression calculator, the linear equation obtained is : ŷ = 11.88571X + 109.92143

Where, 11.88571 represents the Coefficient of X, which is the slope, the change in direct labor hours per hour change in Indirect labor expense.