The Hereford Plant produces a single part used in airplane hydraulic systems. The plant manager has asked the plant controller to determine the monthly volume that would result in the plant meeting its monthly operating profit goal. Operating profits at the plant are calculated as revenue less direct costs (material and labor) less overhead (both fixed and variable). The monthly profit goal is $79,000 before taxes. The plant sells the part for $207 per unit. Direct costs are $104 per unit.

Using the high-low approach, an analyst in the controllers office has estimated overhead costs at $28,590 per month for fixed overhead costs and $79 per unit for variable overhead costs. One of the other cost analysts decided to run a simple regression and based on that reported that, "a better cost estimation equation was"

Monthly overhead = $66,505 + $72 per unit

The analyst reported that the R² was about 66% and that the estimated coefficient for the intercept was "not significant." The data the controller's office used for both analyses follow:

Month	Units Produced	Overhead Costs
1	4,150	$ 356,440
2	4,490	375,160
3	4,660	380,570
4	5,700	480,240
5	4,610	394,280
6	5,430	446,150
7	4,210	352,860
8	5,550	454,450
9	4,710	502,620
10	4,410	370,790
11	5,800	486,790
12	5,640	456,450

The company controller is surprised that the cost estimates are so different and would like to reconcile this before reporting back to the plant manager.

Required:

Analyze the data and recommend a cost estimation equation below.

Instructions:

Click on a point to the right of the graph.

Click within the graph to place the point.

Enter the exact coordinates in the dialog box that appears to the right of the graph.

Click save.

To change coordinates already saved, click on a point already placed in the graph, and enter revised coordinates in the dialog box that opens.

Perform a regression analysis in Excel to determine the regression coefficients for the data using high-low method.

Perform a regression analysis in Excel to determine the regression coefficients for the data using simple regression.

Note: Round your final answers to the nearest whole dollar value.

Re-run the regression model without the data of Month 9 to determine the regression coefficients for the data.

Note: Round your final answers to the nearest whole dollar value.

Determine the estimate to the controller of the volume (in units) that will generate $79,000 per month in operating profits before taxes.

Note: Round your intermediate calculations and final answer to the nearest whole number.