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Kavitha was at the end of her rope yesterday trying to come up with something-anything-to try to estimate a model for her small business's overhead
Kavitha was at the end of her rope yesterday trying to come up with something-anything-to try to estimate a model for her small business's overhead costs. She is 99.9% sure that overhead costs are driven primarily by production, but she also knows that this cost isn't entirely variable. So she grabbed the last 8 months of production and overhead cost data, listed it out, and plotted it as follows. Does this data appear to have a linear relationship? Draw the high-low line into your scatter plot. Now look at the line you just drew in relation to the points. Does it appear to be a reasonably well-fitting line? Explain what characteristics you would look at to make this determination
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