Steps for F-test

The Steps followed in the F-Test are as follows:

(A) State the hypothesis:

Ho: Relationship between Y and all Xs is not significant.
HA: Relationship between Y and all Xs is significant

(B) State the significant level:
                  
 α = 5%

(C) State the test statistics:

F = r² /K
     (1 – r2)/n-k-1

(D) State the decision rule:

k = 1
n-k-1 = 10
α = 0.05
Fc  = 4.965

Computation of F statistics:

F =       0.565/1            
      (1-0.565)/(12 – 1 –1)        

  = 12.989                    

Conclusion:

Since the computed F > Fc then we reject Ho. Therefore the relationship between the labour cost and the number of units is significant.