Management of Tino€™s Tacos wants to estimate overhead costs accurately to plan the company€™s operations and assess its financial needs. A trade association publication reports that certain overhead costs tend to vary with tacos made. Management gathered monthly data on tacos and overhead costs for the past two years for five taco restaurants. No major changes in operations were made over this time period. The data follow:

An analyst entered these data into a computer regression program and obtained the following output:
Coefficients of the Equation:
Intercept ..................................................................... $19,930
Independent Variable (slope)...................................... 1.0774
a. Prepare a graph showing the overhead costs plotted against tacos.
b. Use the results of the regression analysis to prepare the cost estimation equation and to prepare a cost estimate for 20,000 tacos for onemonth.

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Month No. Number of Tacos 20,000 25,000 22,000 23,000 20,000 19,000 14,000 10,000 12,000 17,000 16,000 19,000 21,000 24,000 23,000 22,000 20,000 18,000 12,000 13,000 15,000 17,000 15,000 18,000 Overhead Costs $42,000 49,500 44,750 45,000 40,750 37,750 35,250 32,250 34,500 37,500 35,750 39,000 43,000 46,500 46,500 43,500 40,000 38,250 33,750 35,500 36,750 36,250 35,500 37,500 10 12 13 14 15 16 18 19 20. 21 24