High-Low, Scattergraph, and Regression Analysis; Service Company. Hernandez Accounting Company prepares tax returns for individuals. Marie Hernandez, the owner, would like an accurate estimate of the company's costs for planning and decision-making purposes. When Marie asks you to devise a way to estimate costs on a monthly basis, you recall the importance of breaking costs into xed and variable components. Because the company's costs are driven primarily by the number of tax returns prepared, you decide to use historical data for costs and tax returns prepared: Reporting Period (Month) Total Costs Returns Prepared January $157,000 315 February 145,000 300 March 167.500 375 April 163,000 325 May 120,000 250 June 112,000 210 July 138,000 280 August 100,000 190 September 108,000 205 October 115,000 245 November 136,000 265 December 126,000 255 You enter these data into a computer regression program and get the following results: Coefcients y~intercept 24,626 3: variable 401.86 Required: a. Use the four steps of the highlow method to estimate total xed costs per month and the variable cost per tax return prepared. State your results in the cost equation form Y = f + UK by lling in the dollar amounts for f and u. b. Use the ve steps of the scattergraph method to estimate total xed costs per month and the variable cost per tax return prepared. State your results in the cost equation form Y = f + UK by lling in the dollar amounts for f and v. c Use the regression output given to develop the cost equation Y = f + UK by lling in the dollar amounts for f and o. (1 Use the results of the high~low method (a), scattergraph method (b), and regression analysis (c) to estimate costs for 330 tax returns. (You will have three different answersone for each method.) Which approach do you think is most accurate, and why? e. Marie likes the regression analysis approach and asks you to estimate costs for 900 tax returns using this approach (she plans to expand by opening another ofce and hiring additional employees). Calculate your estimate, and explain why your estimate might be misleading