Dylan Flaherty, marketing clerk for TipTop Marketing Agency, recorded the following information for last year: He would

Question:

Dylan Flaherty, marketing clerk for TipTop Marketing Agency, recorded the following information for last year:

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He would like to be able to estimate customer service costs using the number of customers as the basis for estimation. However, because he has never taken a course in managerial accounting, he does not know how to set up a cost equation. He has therefore approached you for help.

Required:

1. Set up a cost equation for monthly customer service costs using the high?low method.

2. Using the equation from part (1), compute the estimated customer service costs if the number of customers is expected to be 550.

3. You also used the least-squares regression method to do the analysis of the costs; the analysis resulted in the following output:

Intercept: .......................................................82,231.04Coefficient of X-variable: ................................1,227.02Adjusted R square: .................................................0.91

? Set up a cost equation using the above numbers.

? Explain the significance of R square.

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Related Book For  book-img-for-question

Introduction to Managerial Accounting

ISBN: 978-1259105708

5th Canadian edition

Authors: Peter C. Brewer, Ray H. Garrison, Eric Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan

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