Rand recently attended a meeting of the local chamber of commerce and heard a business consultant discuss regression analysis and its business applications. After the meeting, Rand decided to do a regression analysis of the overhead data she had collected. The following results were obtained.

Required:
1. Explain the difference between the overhead rate originally estimated by Dana Rand and the overhead rate developed from the regression method.
2. Using data from the regression analysis, develop the following cost estimates per person for a cocktail party.

a. Variable cost per person

b. Absorption cost per person Assume that the level of activity remains within the relevant range.
3. Dana Rand has been asked to prepare a bid for a 200-person cocktail party to be given next month. Determine the minimum bid price that Rand should be willing to submit.
4. What other factors should Dana Rand consider in developing the bid price for the cocktail party?

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Intercept (a) Coefficient (b) 48,000 4