Question

George Caloz & Frères, located in Grenchen, Switzerland, makes prestige high-end custom watches in small lots. One of the company’s products, a platinum diving watch, goes through an etching process. The company has observed etching costs as follows over the last six weeks:


For planning purposes, management would like to know the amount of variable etching cost per unit and the total fixed etching cost per week.

Required:
1. Prepare a scatter-graph plot. (Place etching costs on the vertical axis and units on the horizontal axis.)
2. Using the least-squares regression method, estimate the variable and fixed elements of etching cost. Express these estimates in the form Y = α + bX.
3. If the company processes five units next week, what would be the expected total etching cost?


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  • CreatedMay 20, 2014
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