Problem
Continuation of Preceding
Problem; Computing Least
Squares Regression Esti
mates; Comparing Multiple
Methods Appendix
L
Total monthly cost: $
$ per unit of activity
Refer to the original data in the preceding problem for Martha's Vineyard Marine Supply.
Required:
Build a spreadsheet: Construct an Excel spreadsheet and use the Excel commands to perform a leastsquares regression. Estimate the variable and fixedcost components in the company's materialhandling department costs.
Write the leastsquares regression equation for the department's costs.
Chapter Activity Analysis, Cost Behavior, and Cost Estimation
'Predict the firm's materialhandling department's costs for a month when units of activity are recorded.
Why do the three cost predictions computed in this and the preceding problem differ? Which method do you recommend? Why?
Build a spreadsheet: Use your Excel spreadsheet from requirement to compute the value for the regression. Interpret the value.
