High-Low and Scatter Diagrams with Implications for Regression Signature Cookies produces and sells gourmet cookies at each of its restaurants. Presented is monthly cost and sales information for one of Signature's restaurants.

Required

a. Using the high-low method, develop a cost-estimating equation for total monthly costs.

b. 1. Plot the equation developed in requirement (a). 2. Using the same graph, develop a scatter diagram of all observations for the bagel shop. Select representative high and low values and draw a second cost-estimating equation.

c. Which is a better predictor of future costs? Why?

d. If you decided to develop a cost-estimating equation using least-squares regression analysis, should you include all the observations? Why or why not?

e. Mention two reasons that the least-squares regression is superior to the high-low and scatter diagram methods of cost estimation.

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Month January. February. March April May. June Sales (Dozens) Total Costs 3,750 $14,400 3,000 13,200 2,000 10,200 750 9,600 2,500 10,800 2,750 11,700