High-Low; Analysis of Regression Results Regression analysis is commonly used to estimatecosts. However, the usefulness of the results depends upon the quality of the data.Fletcher Inc. is a local delivery company. The employees handle deliveries for a variety of companies that have developed apps that allow customers to place orders for food, beverages, packages, etc.The controller of Fletcher would like to come up with an estimate of the cost behavior for the deliverycosts. Fifteen months of data were collected, and the data appear below.Using the high-low method, the controller did a quick calculation and estimated the variable andfixed portions of the delivery costs. A new employee in the accounting department, however, suggested that regression would give a much better estimate of the costs.Observation Delivery Costs Number of Deliveries1 $148,620 11,5402 150,980 12,1803 199,200 16,5604 143,100 11,6855 203,695 16,6856 183,065 14,8757 156,390 13,0108 193,440 13,0109 189,330 15,55510 151,200 11,97011 158,445 12,63012 188,085 15,30013 182,320 14,58014 144,520 11,98015 155,680 13,000Required1. Using the given data, determine the estimated cost equation for delivery costs using the high-low method.2. Using the data available, determine the estimated cost equation for the delivery costs using regression.3. Graph the data to determine if any adjustments should be made to the regression analysis done inrequirement 2.4. Recompute the estimated cost equation for the delivery costs after making any adjustments to the data
High-Low; Analysis of Regression Results Regression analysis is commonly used to estimate
costs. However, the usefulness of the results depends upon the quality of the data.
Fletcher Inc. is a local delivery company. The employees handle deliveries for a variety of companies that have developed apps that allow customers to place orders for food, beverages, packages, etc.
The controller of Fletcher would like to come up with an estimate of the cost behavior for the delivery
costs. Fifteen months of data were collected, and the data appear below.
Using the high-low method, the controller did a quick calculation and estimated the variable and
fixed portions of the delivery costs. A new employee in the accounting department, however, suggested that regression would give a much better estimate of the costs.
Observation Delivery Costs Number of Deliveries
1 $148,620 11,540
2 150,980 12,180
3 199,200 16,560
4 143,100 11,685
5 203,695 16,685
6 183,065 14,875
7 156,390 13,010
8 193,440 13,010
9 189,330 15,555
10 151,200 11,970
11 158,445 12,630
12 188,085 15,300
13 182,320 14,580
14 144,520 11,980
15 155,680 13,000
Required
1. Using the given data, determine the estimated cost equation for delivery costs using the high-low method.
2. Using the data available, determine the estimated cost equation for the delivery costs using regression.
3. Graph the data to determine if any adjustments should be made to the regression analysis done in
requirement 2.
4. Recompute the estimated cost equation for the delivery costs after making any adjustments to the data
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