Your company, Local Express Services, makes special deliveries to real estate and law firms. It is estimating its costs for the coming period.

The controller’s office estimated overhead costs at $9,000 per month for fixed costs and $12 per delivery for variable costs. Your nemesis on the staff, Nick Witt, suggested that the company use the regression approach. Witt has already done the analysis on a home computer and reports the “correct”

cost equation as:

Monthly overhead = $26,501 + $10.70 per delivery When asked for the data used to generate the regression, Witt produces the following list:

Month Overhead Costs Number of Deliveries ea eect Re a Mi ed $142,860 11,430 EEE on aor a SE ORO 151,890 12,180 Gh Sec neaspet oboe ee eM Eeaet 192,600 15,660 CA ee ee Si RO a oar a 141,030 Wi,2s0)

Semona eninen ec ese 203,490 12,780

(Ghia co sue one ppcrorsieae nseEeec Ee 180,630 14,730 NRSee Retint eancterpaee irnas EcEeE R ES 159,630 spon© )

tS) VE peice seach aa eee naeneneye oha 183,990 15,060

(C) PE se deebabek EERE emaceees anes 194,430 15,450

| Qed: coche ee area thee merece ae 150,120 11,970

‘Gl aecoeaeedm iteebee saoeBcEeorteti on 154,080 12,630 2 Ae accede paneer ee aoe 184,800 15,300 TS coacbeoe orotoaan tEee e ee 183,120 14,580 The company controller is somewhat surprised that the cost estimates are so different. You have therefore been assigned to check Witt’s equation.

Required BUILD YOUR OWN SPREADSHEET. Build an Excel spreadsheet to analyze Witt’s results and state your reasons for supporting or rejecting his cost equation.