Gene LA $ G 3 4 Operating expenses $57,800 $51,300 $52,250 $51,900 $56,400 $53,100 X Calibri (Body) 11 ' LG 2 Wrap Text v Paste BIU av Av EE Merge & Center 34 A fax A B C D E H 1 Small Company is investigating cost behavior. One method might be to look at the specific accounts like History of costs Wage Expense, Supplies Expense, and the other expenses and attempt to determine how much fixed and how 2 much variable cost is in each of those accounts. Services provided We haven't done that here. Instead, the total operating expenses have been aggregated into a single January 3,800 account. February 3,200 6 Use least squares regression to identify the fixed and variable costs for Small Company. Operating expenses March 3,400 2 are on the Yaxis. Services provided are the activity driver on the side. April 3,300 B May 4,100 9 Ideally, you will use the Data Analysis add-in for excel. Alternatively you can do it the hand-calculator way June 3,500 10 Hand calculations to find the cost equation numbers 11 1. Find the average value for 'Services provided" and average value for "Operating expenses." Let's call them 12 "ave(x" for average Services Provided and "avell" for Operating Expenses 13 2. Slope (variable cost) OG- 14 15 3.Intercept (fed cost), well slope ave) 16 17 18 19 20 Required 21 1. Find the cout equation for total cost. Total cost Fixed Cost Variable Cost Activity 22 2. Predict the total cost for 4,000 services 3. Comment on the quality of the prediction. If you used a regression package like the 'Data Analysis add- 23 in what was the for the regression and what does that mean? Whether you used a regression package 24 or not, were the actual costs for the months nearest 4,000 services about where they should be using the 25 cost predictions? 26 if you had enough influence over the local economy that you could set prices, at what retail price would 27 vou set services if you wished to make $10,000 in a month where there were 4,000 services? 28 29 30 31 12 32 40