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Bailey Nickles, managing director of the Vancouver Consulting Group, is examining how overhead costs behave with changes in monthly professional labour-hours billed to clients. Assume

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Bailey Nickles, managing director of the Vancouver Consulting Group, is examining how overhead costs behave with changes in monthly professional labour-hours billed to clients. Assume the following historical data: :: (Click the icon to view the data.) Required Requirement 1. Compute the linear cost function, relating total overhead cost to professional labour-hours, using the representative observations of 5,000 and 7,500 hours. Plot the linear cost function. Does the constant component of the cost function represent the fixed overhead costs of the Vancouver Consulting Group? Why? Select the labels for the cost function using the representative observations of 5,000 and 7,500 hours. $190,000 + $46 X = Plot the line for the estimated cost function using the observations of 5,000 and 7,500 hours. Choose the correct answer below, A B OC. OD 700.000 700.000 700.000 700.000 Tot. OH Costs ($) Tot. OH Coats ($) Tot. OH Costs (5) Tot. OH Costs ($) 0+ 0 0 10,000 Pro. Lab-Hrs. Billed 10,000 Pro. Lab-Hrs. Billed 10.000 Pro. Lab-Hrs. Billed 10,000 Pro. Lab-Hrs. Billed the best available starting point for a straight line that The constant component of the cost function does not represent the fixed overhead cost of the Vancouver Consulting Group. The constant component provides approximates how a cost behaves within the 4,000 to 8,500 relevant range. Requirement 2. What would be the predicted total overhead costs for (a) 6,000 hours and (b) 8,500 hours using the cost function estimated in requirement 1? Plot the predicted costs and actual costs for 6,000 and 8,500 hours. Calculate the predicted total overhead costs for the following hours using the cost function estimated in requirement 1. Hours Predicted Overhead Costs $ 6.000 8,500 $ Total Overhead Costs $ 360,000 420,000 455,000 497,000 535,000 607,000 Professional Labour-Hours Billed to Clients 4,000 5,000 6,000 7,000 7,500 8,500

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