Question
Method of Least Squares, Developing and Using the Cost Formula The method of least squares was used to develop a cost equation to predict the
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Method of Least Squares, Developing and Using the Cost Formula
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 171,800 Slope 220
The cost driver used was number of parts inspected.
Required:
1. What is the cost formula?
Total cost of receiving = $fill in the blank 1 + ( $fill in the blank 2 )
2. Using the cost formula from Requirement 1, identify each of the following: independent variable, dependent variable, Variable rate per professional hour, and fixed cost per month.
Independent variable Dependent variable Variable rate per professional hour per part inspected Fixed cost per month
3. Using the cost formula, predict the cost of receiving for a month in which 7,000 parts are inspected.
Total cost of receiving = $fill in the blank 8
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Method of Least Squares, Developing and Using the Cost Formula
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 171,800 Slope 220 The cost driver used was number of parts inspected.
Required:
1. What is the cost formula?
Total cost of receiving = $fill in the blank 1 + ( $fill in the blank 2 )
2. Using the cost formula from Requirement 1, identify each of the following: independent variable, dependent variable, Variable rate per professional hour, and fixed cost per month.
Independent variable Dependent variable Variable rate per professional hour per part inspected Fixed cost per month 3. Using the cost formula, predict the cost of receiving for a month in which 7,000 parts are inspected.
Total cost of receiving = $fill in the blank 8
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