Your boss would like you to estimate the fixed and variable components of a particular cost.Actual data for this cost over four recent periods appear below. Using the least-squares regression method,what is the cost formula for this cost?
A) Y = $75.89 + $1.02X
B) Y = $72.64 + $2.13X
C) Y = $ 0.00 + $5.04X
D) Y = $75.50 + $2.02X

Question

Your boss would like you to estimate the fixed and variable components of a particular cost.Actual data for this cost over four recent periods appear below.  Using the least-squares regression method,what is the cost formula for this cost?
A) Y = $75.89 + $1.02X 
B) Y = $72.64 + $2.13X 
C) Y = $ 0.00 + $5.04X 
D) Y = $75.50 + $2.02X

Quizplus · Accepted Answer

Using Microsoft Excel, the slope and intercept are:
 11ea7761_1887_d795_81a5_f537ec46885a_TB2580_00 Therefore, the cost formula is $75.50 per activity plus $2.02 per unit or:
Y = $75.50 + $2.02X

Your Boss Would Like You to Estimate the Fixed and Variable