Method of Least Squares, Budgeted Time Period Is Different from Time Period Used to Generate Results

The method of least squares was used to develop a cost equation to predict the cost of receiving purchased parts at a video game manufacturer. Ninety-six data points from monthly data were used for the regression. The following computer output was received:

Intercept	173,700
Slope	360

The cost driver used was number of parts inspected.

Required:

1. What is the cost formula for a year?

Total annual cost of receiving = ( fill in the blank 1 x $fill in the blank 2 ) + ( $fill in the blank 3 ×

Fixed cost per monthNumber of parts inspected in a yearVariable rate

)

2. Using the cost formula from Requirement 1, predict the cost of parts inspection for a year in which 16,500 parts are inspected.

Total annual cost of receiving = $fill in the blank 5