A budget is an expression of management's expectations and goals concerning future revenues and costs. To increase their effectiveness, many budgets are flexible, including allowances for the effect of variation in uncontrolled variables. For example, the costs and revenues of many production plants are greatly affected by the number of units produced by the plant during the budget period, and this may be beyond a plant manager's control. Standard cost-accounting procedures can be used to adjust the direct-cost parts of the budget for the level of production, but it is often more difficult to handle overhead. In many cases, statistical methods are used to predict or forecast overhead from the level of production using historical data. As a simple example, consider the historical data for a certain plant. Enter the data into EXCEL and analyze it to answer the following items. Production (in 10,000) units: 5 6 7 8 9 10 11 Overhead costs (in $1,000): 13 11.4 13 16 15.7 15.3 17.1 (a) Construct a scatterplot of y versus x. WebAssign Plot WebAssign Plot WebAssign Plot WebAssign Plot Correct: Your answer is correct. (b) State the model equation. PRODUCTION = β0 + β1OVERHEAD OVERHEAD = β1PRODUCTION OVERHEAD = β0 + β1PRODUCTION PRODUCTION = β1 + β0OVERHEAD OVERHEAD = β1 + β0PRODUCTION PRODUCTION = β1OVERHEAD Correct: Your answer is correct.