Required information Skip to question [The following information applies to the questions displayed below.] Professor John Morton has just been appointed chairperson of the Finance Department at Westland University. In reviewing the departments cost records, Professor Morton has found the following total cost associated with Finance 101 over the last five terms: Term Number of Sections Offered Total Cost Fall, last year 2 $ 7,500 Winter, last year 6 $ 13,000 Summer, last year 5 $ 10,000 Fall, this year 3 $ 8,000 Winter, this year 4 $ 9,500 Professor Morton knows that there are some variable costs, such as amounts paid to graduate assistants, associated with the course. He would like to have the variable and fixed costs separated for planning purposes.

3-a. Assume that because of the small number of sections offered during the Winter Term this year, Professor Morton will have to offer eight sections of Finance 101 during the Fall Term. Compute the expected total cost for Finance 101.

Fixed cost
Variable cost
Total expected cost	$0

3-b. Can you see any problem with using the cost formula from (2) above to derive this total cost figure?

Coefficient estimates may have high variance.radio button unchecked1 of 4

Prediction is not guaranteed to become actual.radio button unchecked2 of 4

Prediction is out of the relevant range.radio button unchecked3 of 4

Prediction is based on old data.radio button unchecked4 of 4