Required information

Skip to question

$[$The following information applies to the questions displayed below.$]$

Martha$$s Vineyard Marine Supply is a wholesaler for a large variety of boating and fishing equipment. The company$$s controller, Mathew Knight, has recently completed a cost study of the firm$$s material$-$handling department. Knight used work measurement to quantify the department$$s activity. The control factor unit used in the work$-$measurement study was hundreds of pounds of equipment unloaded or loaded at the company$$s loading dock. Knight compiled the following data.

Month Units of Activity $($hundreds of pounds of equipment loaded or unloaded$)$ Material$-$Handling Department Costs

January $3,700$ $ $13,600$

February $3,50013,200$

March $3,20012,200$

April $2,90012,100$

May $4,10013,000$

June $4,30015,400$

July $3,90013,900$

August $3,70013,300$

September $4,50014,400$

October $3,00012,000$

November $3,10013,250$

December $3,30013,250$

Required:

$1.$ Construct an Excel spreadsheet and use the Excel commands to perform a least$-$squares regression. Estimate the variable$-$ and fixed$-$cost components in the company$$s material$-$handling department costs. $2.$ Complete the least$-$squares regression equation for the department$$s costs$\mathrm{.}3.$ Predict the firm$$s material$-$handling department$$s costs for a month when $2,350$ units of activity are recorded$\mathrm{.}4.$ Which cost method do you recommend?

multiple choice

The visual fit method.

The high$-$low method.

The least squares regression method.