You have been assigned an intern to help you forecast your firm’s costs at different volumes. He thinks he will get cost and volume data from the two most recent months, plug them in to the high-low method equations, and turn in the cost equation results to your boss before the hour is over. As his mentor, explain to him why the process is not quite as simple as he thinks. Point out some of the concerns he is overlooking, including your concerns about his choice of data and method.
Answer to relevant Questions1. Would the high-low method or regression analysis result in a more accurate cost equation for the data pictured in the scatter plot? Explain. 2. A regression analysis of the data revealed an R-squared figure of 0.939. ...Use the information from the Northern Cruiseline Data Set in Chapter 7, page 401. Assume that in the month of April, Northern Cruiseline sold 8,000 regular cruises and 3,500 executive cruises and that $75,000 of the fixed ...Grand’s Sporting Goods is a retailer of sporting equipment. Last year, Grand’s Sporting Goods’ sales revenues totalled $6,000,000. Total expenses were $2,100,000. Of this amount, approximately $1,500,000 were variable, ...Assume that Alice’s Flower Power does a regression analysis on the next year’s data using Excel 2007. The output generated by Excel is as follows: Requirements 1. Determine the firm’s cost equation (use the output from ...Write the cost equation for each of the following cost behaviours. Define the variables in each equation. a. Fixed b. Mixed c. Variable
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