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Required information [The following information applies to the questions displayed below.] Caiman Distribution Partners is the Brazilian distribution company of a U.S. consumer products firm.

Required information

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

Caiman Distribution Partners is the Brazilian distribution company of a U.S. consumer products firm. Inflation in Brazil has made bidding and budgeting difficult for marketing managers trying to penetrate some of the country's rural regions. The company expects to distribute 450,000 cases of products in Brazil next month. The controller has classified operating costs (excluding costs of the distributed product) as follows.

Account Operating Cost Behavior
Supplies $ 1,415,000 All variable
Supervision 204,000 $ 160,000 Fixed
Truck expense 1,340,000 $ 196,000 Fixed
Building leases 844,000 $ 556,000 Fixed
Utilities 213,000 $ 143,000 Fixed
Warehouse labor 847,000 $ 144,000 Fixed
Equipment leases 761,000 $ 581,000 Fixed
Data processing equipment 958,000 All fixed
Other 849,000 $ 373,000 Fixed
Total $ 7,431,000

Although overhead costs were related to revenues throughout the company, the experience in Brazil suggested to the managers that they should incorporate information from a published index of Brazilian prices in the distribution sector to forecast overhead in a manner more likely to capture the economics of the business.

Following instructions from the corporate offices, the controller's office in Brazil collected the following information for monthly operations from last year.

Month Cases Price Index Operating Costs
1 249,000 115 $5,699,165
2 346,000 115 5,806,664
3 250,000 122 5,849,931
4 406,000 128 5,927,643
5 335,000 117 5,939,161
6 362,000 124 6,043,390
7 395,000 129 5,918,521
8 456,000 127 6,133,894
9 385,000 136 6,126,156
10 432,000 135 6,186,651
11 398,000 130 6,208,825
12 457,000 143 6,362,281

These data are considered representative for both past and future operations in Brazil.

c-1. Using Excel, calculate the simple regression of operating costs on cases shipped and enter the regression coefficients.

c-2. Compute the estimation of operating costs assuming that 450,000 cases will be shipped next month by using the results of a simple regression of operating costs on cases shipped.

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