On November 15, 2009, Sandra Cook, a newly hired cost analyst at Peterson Company, was asked to predict overhead costs for the company’s operations in 2010, when 530 units are expected to be produced. She collected the following quarterly data:

1. Using the high-low method to estimate costs, prepare a prediction of overhead costs for 2010.
2. Sandy ran a regression analysis using the data she collected. The result was
Y = $347 + $5.76 X
Using this cost function, predict overhead costs for 2010.
3. Which prediction do you prefer?Why?

  • CreatedNovember 19, 2014
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