Dana Rand owns a catering company that prepares banquets and parties for both indvicual and business functions throughout the year. Rand's business is seasonal, with a heavy schedule during the summer months and the year-end holidays and a light schedule at other times. During peak periods, there are extra costs; however, even during nonpeak periods Rand must work more to cover her expenses. One of the major events Rand's customers request is a cocktail party. She offers a standard cocktail party and has developed the following cost structure on a per-person basis. Food and beverages Labor (0.7 hr.$10 per hour) Overhead (0.7 hr. $12 per hour) Total cost per persor $12.00 7.00 840 S27.40 When bidding on cocktail parties, Rand adds a 15 percent markup to this cost structure as a profit margin. Rand is quite certain about her estimates of the prime costs but is not as comfortable with the overhead estimate. This estimate was based on the actual data for the past 12 months presented in the following table. These data indicate that overhead expenses vary with the direct-labor hours expended. The $12 estimate was determined by dividing total overhead expended for the 12 months ($752,000) by total labor hours (61,300) and rounding to the nearest dollar. Month January February March April May June July August September October November 77,000 68,000 46,000 43,000 48,000 47,000 80,000 82,000 47,000 74,000 85,000 61,300 752,000 Labor Overhead Hours Expenses 7,300 S 55,000 5,300 7,600 5,900 2,200 7,700 2,600 5,100 4,200 2,100 7.200 4,100 Total 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. Intercept (a) Coefficient (b) 54,000 Required: 2. Using data from the regression analysis, develop the following cost estimates per person for a cocktail party. Assume that the level of activity remains within the relevant range Dana Rand owns a catering company that prepares banquets and parties for both indvicual and business functions throughout the year. Rand's business is seasonal, with a heavy schedule during the summer months and the year-end holidays and a light schedule at other times. During peak periods, there are extra costs; however, even during nonpeak periods Rand must work more to cover her expenses. One of the major events Rand's customers request is a cocktail party. She offers a standard cocktail party and has developed the following cost structure on a per-person basis. Food and beverages Labor (0.7 hr.$10 per hour) Overhead (0.7 hr. $12 per hour) Total cost per persor $12.00 7.00 840 S27.40 When bidding on cocktail parties, Rand adds a 15 percent markup to this cost structure as a profit margin. Rand is quite certain about her estimates of the prime costs but is not as comfortable with the overhead estimate. This estimate was based on the actual data for the past 12 months presented in the following table. These data indicate that overhead expenses vary with the direct-labor hours expended. The $12 estimate was determined by dividing total overhead expended for the 12 months ($752,000) by total labor hours (61,300) and rounding to the nearest dollar. Month January February March April May June July August September October November 77,000 68,000 46,000 43,000 48,000 47,000 80,000 82,000 47,000 74,000 85,000 61,300 752,000 Labor Overhead Hours Expenses 7,300 S 55,000 5,300 7,600 5,900 2,200 7,700 2,600 5,100 4,200 2,100 7.200 4,100 Total 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. Intercept (a) Coefficient (b) 54,000 Required: 2. Using data from the regression analysis, develop the following cost estimates per person for a cocktail party. Assume that the level of activity remains within the relevant range