E$5-24$ Estimating Cost Behavior Using Least$-$Squares Regression and High$-$Low Method

LO $5-3,5-4$

Tempe Office Services and Supplies $($TOSS$)$ provides various products and services in the Tempe Research Park, home to numerous high$-$tech and bio$-$tech companies. Making color copies is one of its most popular and profitable services. The controller performed a regression analysis of data from the Color Copy Department with the following results:

$\backslash$table$[[$Intercept$,238\mathrm{.}69],[$R$-$squared,$\mathrm{.}968],[\backslash$table$[[$Number of$],[$observations$]],6],[x$ coefficient,$\mathrm{.}069]]$

The regression output was based on the following data:

$\backslash$table$[[$Month$,\backslash$table$[[$Number of$],[$Color Copies$]],\backslash$table$[[$Color Copy$],[$Department Costs$]]],[$July$,17,000,$$$1,445$