Problem 8-49 (Algo) Cost Estimation; High-Low Method; Regression Analysis [LO 8-3]

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Lexon Incorporated is a large manufacturer of affordable DVD players. Management recently became aware of rising expenses resulting from returns of malfunctioning products. As a starting point for further analysis, Paige Jennings, the controller, wants to test different forecasting methods and then use the best one to forecast quarterly expenses for 2022. The relevant quarterly data for the previous three years follow:

2019 Quarter	Return Expenses	2020 Quarter	Return Expenses	2021 Quarter	Return Expenses
1	$12,500	1	$12,900	1	$13,400
2	11,600	2	12,000	2	12,300
3	11,300	3	11,700	3	12,100
4	13,700	4	14,000	4	14,600

The result of a simple regression analysis using all 12 data points yielded an intercept of $11,854.55 and a coefficient for the independent variable of $126.22. (R-squared = 0.19, SE = $988.14.)

Part 1 (Algo)

Required:

1. Plot the data in the order of the dates. (Click curve 1 and then click the graph to bring up the data coordinates. Enter the exact coordinates for each of the 12 quarters.)