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PROBLEM I (5 points) Abby, Inc., a building materials supply company, has a material-handling department which has studied its cost for the past year and
PROBLEM I (5 points) Abby, Inc., a building materials supply company, has a material-handling department which has studied its cost for the past year and has determined the following: Month Activity Level (pallets Material Handling of material) Department Casts Jan - 3,600 $11,700 November December 2,800 11,350 Required: Show all work. (See point allocation below; total 5 points) 1. Construct an Excel spreadsheet to perform a least-squares regression to estimate the material handling department's cost behavior. (2 points) 2. Provide an equation to express the results of this estimation method. (1 point) 3. Use your Excel spreadsheet from requirement (2) to compute the R2 value for the regression. What does this R2 mean? (1 point) 4. Predict the department's material-handling costs for a month when 6,975 units of activity are recorded. Use each of your cost equations to make the prediction. (1 point)
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