The controller of Standard Industries has collected the following monthly cost data for analyzing the behavior of electricity costs.

Instructions

a. Determine the fixed costs and unit variable costs using regression analysis. (We recommend the use of Excel.)
b. Prepare a scatter plot using Excel. Present the cost equation line estimated in part (a).
c. What electricity cost does the cost equation estimate for a level of activity of 500 machine hours? By what amount does this differ from March’s observed cost for 500 machine hours?

Transcribed Image Text:

Total Total Electricity Costs Machine Hours $2,500 January February 300 3,000 350 March 3,600 500 April May 4,500 690 3,200 400 June 4,900 4,100 700 July August September 650 3,800 520 5,100 680 October 4,200 630 November 3,300 350 December 6,100 720