Question

Problem 6-42 Continuation of Preceding Problem; Computing Least-Squares Regression Estimates; Comparing Multiple Methods (Appendix) (LO 6-1, 6-2, 6-5, 6-6, 6-8)

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Martha’s Vineyard Marine Supply is a wholesaler for a large variety of boating and fishing equipment. The company’s controller, Mathew Knight, has recently completed a cost study of the firm’s material-handling department in which he used work measurement to quantify the department’s activity. The control factor unit used in the work-measurement study was hundreds of pounds of equipment unloaded or loaded at the company’s loading dock. Knight compiled the following data.

	Units of Activity
Month	(hundreds of pounds of equipment loaded or unloaded)			Material-Handling Department Costs
January		1,900		$	11,800
February		1,700			11,400
March		1,400			11,300
April		1,100			10,300
May		2,300			11,200
June		2,500			12,700
July		2,100			12,100
August		1,900			11,500
September		2,700			12,240
October		1,200			11,100
November		1,300			11,450
December		1,500			11,450

Problem 6-42 Part 1

Required:

1. Compute the least-squares regression estimate of the variable- and fixed-cost components in the company’s material-handling department costs. (Do not round intermediate calculations. Round "Variable-cost component" to 2 decimal places and other answer to the nearest whole dollar amount.)

2. Complete the least-squares regression equation for the department’s costs. (Do not round intermediate calculations. Round variable cost per unit to 2 decimal places and other answer to the nearest whole dollar amount.)

3. Predict the firm’s material-handling department’s costs for a month when 2,300 units of activity are recorded. (Do not round intermediate calculations. Round variable cost per unit to 2 decimal places and final answer to the nearest whole dollar amount.)

Answer 1