Your company provides a variety of delivery services. Management wants to know the volume of a particular delivery that would generate $10,000 per month in operating profits before taxes. The company charges $20 per delivery. The controller€™s office has estimated overhead costs at $9,000 per month for fixed costs and $12 per delivery for variable costs. You believe that the company should use regression analysis. Your analysis shows the results to be:
Monthly overhead + $26,501 + $10.70 per delivery
Your estimate was based on the following data:

The company controller is somewhat surprised that the cost estimates are so different. You have been asked to recheck your work and see if you can figure out the difference between your results and the controller€™s results.

Required
a. Analyze the data and your results and state your reasons for supporting or rejecting your cost equation.
b. Write a report that informs management about the correct volume that will generate $10,000 per month in operating profits beforetaxes.

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Number of Delivernes Month Overhead Costs $142,860 151,890 192,600 141,030 203,490 180,630 159,630 183,990 194,430 150,120 154,080 184,800 183,120 11,430 12,180 15,660 11,250 12,780 14,730 12,510 15,060 15,450 11,970 12,630 15,300 14,580 10