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Problem 5A-6 (Algo) Least-Squares Regression; Scattergraph; Comparison of Activity Bases [LO5-11] The Hard Rock Mining Company is developing cost formulas for management planning and decision-making
Problem 5A-6 (Algo) Least-Squares Regression; Scattergraph; Comparison of Activity Bases [LO5-11] The Hard Rock Mining Company is developing cost formulas for management planning and decision-making purposes. The company's cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base that correlates with the cost. The controller has suggested that tons mined might be a good base to use in developing a cost formula. The production superintendent disagrees; she thinks that direct labor-hours would be a better base. The cost analyst has decided to try both bases and has assembled the following information: -b. Using the least-squares regression method, estimate the variable utilities cost per direct labor-hour and the total fixed utilities cost er quarter. Express these estimates in the form Y=a+bX. (Round the Variable cost to 2 decimal places and Fixed Cost to the earest whole dollar amount.)
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