Talon Services offers standardized job counseling services. The company is planning a new service line targeted to active seniors who are retiring and looking forward to a new career. The service will sell for a flat $960 per client and will consist of a standardized offering. The service will consist of a total of 8 hours with a counseling specialist and a battery of tests to assess interests and aptitudes. Counseling specialists, who are contract employees, are paid $32 per hour. The testing is estimated to cost $120 per client.

Administrative costs for the new service have not been estimated, but the company has collected information on counseling hours and administrative costs for other services over the past 15 months. The following is a summary of a simple regression of administrative costs on counseling hours:

Simple Regression Analysis Results
Dependent variableAdministrative costs (monthly)
Independent variableCounseling hours (monthly)
Computed values
Intercept	$ 75,000
Coefficient on independent variable	$ 18.40
Coefficient of correlation	0.835
R2	0.697

Required:

1. What percentage of the variation in administrative costs is explained by the independent variable?

   multiple choice 1

   • 83.5%

   • 69.7%

   • 92.1%

   • 48.6%

   • Some other amount

2. What is the total administrative cost for an estimated activity level of 5,400 counseling hours?

   multiple choice 2

   • $99,360

   • $75,000

   • $24,360

   • $174,360

   • Some other amount

3. What is the total estimated variable cost per client (assuming that counseling costs are variable costs)?

   multiple choice 3

   • $523.20

   • $403.20

   • $267.20

   • $147.20

   • Some other amount

4. What is the expected contribution margin per client to be earned?

   multiple choice 4

   • $704.00

   • $556.80

   • $584.00

   • $436.80

   • Some other amount

5. What is the estimating equation for total cost based on number of clients implied by these results?

   multiple choice 5

   • Total cost = $75,000 + ($436.80 Number of clients)

   • Total cost = $75,000 + ($403.20 Number of clients)

   • Total cost = $75,000 + ($50.40 Number of counseling hours)

   • Some other equation