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Newton Company used linear regression analysis to obtain the following output:
Payroll Department Cost
Explained by Number of Employees
Constant $5,800
Standard error of Y estimate 630
r2 0.8924
Number of observations 20
X coefficient $1.902
Standard error of coefficient 0.0966
Required:
Problem i. What is the total fixed cost?
Problem ii. What is the variable cost per employee?
Problem iii. Prepare the linear cost function.
Problem iv. Comment on the explanatory power of the number of employees in relation to payroll department cost.
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