6.43 Problem Question: Cost Estimation Methods; Cost Analysis, E Commerce

Scatter diagram c = 320,000 + 2.15Pt

Least-Squares regression : c = 312,000 + 2.30PT

High-Low method: C = $395,000 + 2.55PT

1.what are the pullet-point list suitable for use in Williams's report that describes the features of a scatter diagrams, least-square regression, and the high-low method. Determine which of the three tools will typically produce the most accurate results.

2. Will the three cost estimation tools normally result in different equations?why?

3. Assuming the use of least-squares regression, explain what the $312,000 and $2.30 figures represent.

4. Assuming the use of a scatter diagram, predict the cost of an upcoming month when Global American expects to write 580,000 tickets

5. Did Williams err in constructing the equation on data of the past 12 months? Briefly explain

6. Assume that over the next few years, more of Global American's passangers will take advantage of e-ticketing over the internet. What will likely happen to the airline's cost structure in terms of variable and fixed cost incurred?