TJs Cheese Cake Factory, Inc. sells original cheese cake for $16 each. The company provided the following units and total cost data concerning its cake sales for each month during 2011:

	Cost	Units
January	55000	2500
February	59000	2800
March	60000	3000
April	64000	4200
May	67000	4500
June	71000	5500
July	74000	6500
August	77000	7500
September	75000	7000
October	68000	4500
November	62000	3100
December	73000	6500

a. Use the linear regression method to estimate fixed and variable costs. Excel has a function that you can use (I have posted these data in excel on Blackboard for your convenience). Print out the regression output and attach to this test.

b. Interpret and evaluate your regression model and results. Write out the cost formula.

c. Estimate total costs in a month when 6,000 cakes are produced and sold.

d. Estimate total profit in a month when 6,000 cakes are produced and sold.

e. You are working on the budget for October 2012 and expect 10,000 cakes will be produced and sold. Estimate total costs in a month when 10,000 cakes are produced and sold. Will you use the estimated cost in your budget? Why?

f. How does linear regression differ from the high-low method in estimating fixed and variable costs? Discuss the pros and cons of each.