Years

Output X $($OO units$)$: $30,26,34,32,28$

Costs Y $($S$.$uuu$)$: $92,80,95,85,73$

There is a high degree of correlation between output and costs, and so it is decided to calculate fixed costs and the variable cost per unit of output using the least square method of linear regression analysis.

Required:

Calculate an equation to determine the expected level of costs for any given volume of output.

Prepare a budget for total costs if output is $32,000$ units.

Confirm that the degree of correlation between output and costs is high by calculating the correlation coefficient.

Interpret the results that you obtained through statistical techniques to justify your explanation.