Refer to the information in E5-4 regarding Valley Dental.

Required:

1. Create a scattergraph using Valley’s activity and cost information and draw a line on the graph that you believe has the best fit.

2. Using this graph and best fitting line, estimate Valley Dental’s total fixed cost.

3. Does your visual fit line differ from the one calculated using the high-low method? If so, why?

Data from E5-4

Valley Dental Services is a specialized dental practice whose only service is filling cavities. Valley has recorded the following for the past nine months.

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Number of Month Cavities Filled Total Cost January February March 625 $2,800 700 2,900 500 2,100 April 425 2,000 May 450 2,200 June 300 1,700 July 375 1,800 August 550 2,400 September 575 2,600