# Dean and Powell Tax Services Company has 31 branch offices in the nation. Each office has about three to six professional accountants and one to two secretaries. In a busy season, the office manager, who is also a professional accountant,

Required

a. The company uses the number of professional hours as the cost driver for office support costs. Use an algebraic equation to describe how total office support costs can be estimated.

b. Use a spreadsheet program to perform a regression analysis. Use office support costs as the dependent variable (Y) and the professional hours as the independent variable (X). Determine the total fixed cost per office and variable cost per professional hour.

c. Identify the R2 statistic provided by the Excel program and explain what it means.

d. Mr. Dean plans to open a new branch office in a Dallas suburb. He expects that the monthly professional hours will be 3,000. Estimate the total office support cost for Mr. Dean. What portion of the total cost is fixed and what portion is variable?

e. Explain how multiple regression analysis could be used to improve the accuracy of the costestimates.

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## a Assume the following X the number of professional hours Y the dollar amount office support cost The algebraic equation should be as follows Y a bX W…View the full answer

**Related Book For**

## Fundamental Managerial Accounting Concepts

**ISBN:** 978-0078025655

7th edition

**Authors:** Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old

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