Professor John Morton has just been appointed Chairman of the Department of Finance at Westland University. Reviewing
Question:
Professor John Morton has just been appointed Chairman of the Department of Finance at Westland University. Reviewing the department's cost records, Professor Morton found the following total cost associated with Finance 101 for the past few periods:
Term | Number of Sections Offered | Total Cost | |||
Autumn last year | 7 | ps | 13,500 | ||
winter last year | 3 | ps | 8,000 | ||
summer last year | 6 | ps | 12,000 | ||
fall this year | 2 | ps | 6,500 | ||
winter this year | 4 | ps | 10,000 | ||
Professor Morton knows that there are some variable costs, such as amounts paid to graduate assistants, associated with the course. He would like to have fixed and variable costs separated for planning purposes.
Required:
1. Prepare a scatter plot. (Place the total cost on the vertical axis and the number of sections offered on the horizontal axis.)
2(a). Using the least squares regression method, calculate the variable cost per section and the total fixed cost per term for Finance 101. (Round your fixed cost and variable cost to the nearest whole dollar.)
2(b). Express these estimates in the form of the linear equation Y = a + bX . (Round your fixed cost and variable cost to the nearest whole dollar.)
3, Suppose that due to the small number of sections offered during the winter term this year, Professor Morton will have to offer ten sections of Finance 101 during the fall term. Calculate the expected total cost for Finance 101. (Do not round your intermediate estimates. Round your final answer to the nearest whole dollar.)
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer