Carolina Yachts builds custom yachts in its production factory in South Carolina. Once complete, these yachts must be shipped to the dealership. They have collected this shipping cost data:

A. Prepare a scatter graph of the shipping data. Plot cost on the vertical axis and yachts shipped on the horizontal axis. Is the relationship between shipping costs and unit shipped approximately linear?

Draw a straight line through the scatter graph.

B. Using the high-low method, create the cost formula for Carolina Yachts’ shipping costs.

C. The least-squares regression method was used and the analysis resulted in this cost equation: Y = 4,000 + 1,275x. Comment on the accuracy of your high-low method estimation.

D. What would you estimate shipping costs to be if Carolina Yachts shipped 10 yachts in a single month?

Use the cost formula you obtained in part B. Comment on how accurately this is reflected by the scatter graph you constructed.

E. What factors other than number of yachts shipped do you think could affect Carolina Yachts’ shipping expense? Explain.

Transcribed Image Text:

Month January February March April May June July Yachts Shipped 6 4 38275 Shipping Cost $11,650 9,100 7,825 14,200 6,550 12,925 10,375