(Scattergraph; least squares) Richard’s Charters operates a fleet of powerboats in Naples, Florida. Richard wants to develop a cost formula for labor costs (a mixed cost). Fie has gathered the following data on labor costs and two potential pre¬ dictive bases: number of charters and gross receipts:

a. Prepare a scattergraph for labor costs using each of the alternative prediction bases.

b. Using the least squares method, develop a labor cost formula using each prediction base.LO1 

Transcribed Image Text:

$16,000 18,400 24,000 MONTH January February March LABOR COSTS NUMBER OF CHARTERS 10 GROSS RECEIPTS $ 12,000 14 18,000 22 26,000 April 28,400 28 36,000 May 37,000 40 60,000 June 56,000 62 82,000 July 68,000 100 120,000 August 60,000 90 100,000 September 48,000 80 96,000