Question
Tempe Office Services and Supplies (TOSS) provides various products and services in the Tempe Research Park, home to numerous high-tech and bio-tech companies. Making color
Tempe Office Services and Supplies (TOSS) provides various products and services in the Tempe Research Park, home to numerous high-tech and bio-tech companies. Making color copies is one of its most popular and profitable services. The controller performed a regression analysis of data from the Color Copy Department with the following results:
Intercept | 80.776721 |
R square | 0.756419 |
Number of observations | 6 |
X coefficient | 0.079466 |
The regression output was based on the following data:
Month | Number of Color Copies | Color Copy Department Costs | ||||
July | 24,500 | $2,065 | ||||
August | 23,200 | 1,900 | ||||
September | 23,400 | 1,950 | ||||
October | 24,850 | 2,065 | ||||
November | 23,250 | 1,950 | ||||
December | 24,450 | 1,970 | ||||
Required: 1. What is the variable cost per color copy for TOSS? (Enter your answer in cents, rounded to 1 decimal place (i.e., $0.076 should be entered as 7.6)).
Variable cost per color copy in cents:
2. What is the fixed cost for the Color Copy Department? (Round your answer to 2 decimal places.)
Fixed cost per month:
Based on the regression output obtained by the controller, what cost formula should be used to estimate future total costs for the Color Copy Department? Enter answer as an equation in the form of y = a + bx. (Round your fixed costs to 2 decimal places and your variable cost per unit to 3 decimal places.)
Total costs = _____ + _____ ( per number of color copies)
5-a. Use the high-low method to estimate the variable and fixed costs for the Color Copy Department. (Round your answers to 2 decimal places.)
Variable cost per color copy:
Fixed cost
5-b. What cost formula should be used based on your analysis? Enter answer as an equation in the form of y = a + bx. (Round your intermediate calculations and your final answers to 2 decimal places.)
Total cost = ____ + ____ (per number of color copies)
6. If 24,800 copies are made during January, what is the total cost predicted by each method? (Use the answers that you provided in parts 3 and 5-b and round your final answers to 2 decimal places.)
Total cost
Regression:
High-low:
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