The accounting department of Insecurity Protection Services, a company that provides security services for rich, famous, and insecure people (and anyone else who can afford them) is analyzing the costs of its

(LO 3) accounting services. Analysts have selected the following cost drivers: number of paychecks processed, customer accounts maintained, and special analyses.

eXcel The cost data and level of cost-driver activity for the past 16 months follow:

mhhe.com/hilton4e Special Customer Paychecks Accounting Month Analyses Accounts Processed Service Costs 1 2 325 1,029 $ 63,800 2 4 310 993 68,900 3 2 302 1,268 64,000 4 1 213 1,028 61,300

§) 2 222 984 61,600 6 0 214 Tie 50,800 7 1 131 762 51,020 8 1 123 7.39 54,300 9 O WS 708 50,500 10 2 296 15232 64,800 11 2 213 978 58,000 12 1 222 929 57,500 13 2 217 1,059 62,200 14 2 132 942 54,900 15 4 300 1,299 71,530 16 4 315 1,283 64,800 Totals 30 3,650 15,945 $959,950 Required

a. BUILD YOUR OWN SPRE EET. Using regression analysis, find the best cost estimation equation.

b. Assuming the following levels of cost-driver volume for a month, what is the accounting department’s estimated costs of doing business based on the multiple regression results?

1,000 paychecks processed 200 customer accounts maintained 3 special analyses

c. Insecurity Protection Services is considering outsourcing the processing of all paychecks.

Compared to your answer in requirement (b), how much would the accounting department save per month by outsourcing all paycheck processing (before considering the cost of outsourcing)?