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2. An accountant for a laboratory wishes to disaggregate the business costs into the variable cost per diagnostic test and the fixed cost than must

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2. An accountant for a laboratory wishes to disaggregate the business costs into the variable cost per diagnostic test and the fixed cost than must be paid irrespective of how many test had been performed. The accountant provides the following summary statistics: mean std. dev. minimum maximum Cost (f) 83,074 10,800 61,000 99,000 Tests 5,300 1,060 3,050 7,100 n = 12, correlation = 0.981. Use a simple linear regression to estimate the laboratory's fixed and variable costs. The accountant had proposed a variable cost of L8 per test when designing the budget at the beginning of the year. At the 5% significance level, assess whether or not the accountant's proposed rate was reasonable given that the residual standard error from the fitted regression model is $2,190

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