Problem 8-42 (Algo) Cost Estimation; High-Low and Regression Methods [LO 8-2, 8-3, 8-4]

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The Mac Davis Company specializes in the purchase, renovation, and resale of older homes. Mac employs several carpenters and painters to do the work for him. It is essential for him to have accurate cost estimates so he can determine total renovation costs before he purchases a piece of property. If estimated renovation costs plus the purchase price of a house are higher than the houses estimated resale value, it is not a worthwhile investment.

Mac has been using the homes interior square feet for his exterior paint cost estimations. Recently he decided to include the number of external openingsthe total number of doors and windows in a houseas a cost driver. Their cost is significant because they require time-consuming preparatory work and careful brushwork. The rest of the house usually is painted either by rollers or spray guns, which are relatively efficient ways to apply paint to a large area. Mac has kept careful records of these exterior painting costs on his last 12 jobs:

House	Square Feet	External Openings	Costs
1	2,500	13	$ 2,810
2	3,010	15	3,742
3	2,810	12	3,110
4	2,850	12	3,150
5	4,600	19	4,700
6	2,700	13	3,225
7	2,600	11	2,920
8	2,550	11	2,836
9	2,600	10	3,242
10	3,700	16	4,112
11	2,650	13	3,210
12	3,550	16	3,965

Part 2 (Algo)

Required:

3a. Plot the cost data against square feet and against openings. (Click each house and then click the graph to bring up the data coordinates. Enter the exact coordinates for each house.)