Break-Even AnalysisThe table below contains price-demand and total cost data for the production of treadmills, wherep is the wholesale price (in dollars) of a treadmill for an annual demand of a treadmills, and C is thetotal cost (in dollars) of producing a treadmills.X2,9103,4154,6455,330P ($)1,4501,2751,123918C ($)3,634,0003,782,0004,185,0004,290,000Use this data to find a linear regression equation for price-demand data, using as theindependent variable:P = ax + b,where a is rounded to 1 decimal place and b is rounded to the nearest integer.Use this data to find a linear regression model for the cost data, using a as the independentvariable:C(x) = cx + d,where c is rounded to the nearest integer and d is rounded to the nearest 10,000.Use these linear regression models to answer questions 11-14 below. Question 11Use the linear regression models above to answer this question.Estimate the fixed costs. Round to the nearest $10,000.$Question 12Use the linear regression models above to answer this question.Estimate the variable cost per treadmill. Round to the nearest dollar.per treadmill producedLA$

Using the given data, we ran a regression in excel with: Dependent Variable: Price Independent Variable: Demand The regression equation for demand will be: p=ax+b a is the slope coefficient and b is the intercept.Regression Equation for demand: p=-0.2x+2007 Following the same steps to get linear regression for cost data, where : Dependent Variable: Cost Independent Variable : Demand The regression equation for demand will be: C=cx+d c is the slope coefficient (variable cost as it depends on output) and d is the intercept (as it remainsa same t.Regression Equation for cost : C=281x+2830000Answer 11 Fixed costs are those costs that remain the same through all the output levels. It means they do not vary with the output level. The intercept part of a linear cost regression depicts fixed cost. Fixed Cost=$2830000 Answer 12 Variable cost is the cost that changes with output. It will not remain constant throughout. The slope coefficient part of a linear cost regression depicts variable cost. Variable Cost=$281 per treadmill produced

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Question 11 Use the linear regression models above to answer this question. Estimate the fixed costs. Round to the nearest $10,000. $ Question 12 Use the linear regression models above to answer this question. Estimate the variable cost per treadmill. Round to the nearest dollar. per treadmill produced

Question 11 Use the linear regression models above to answer this question. Estimate the fixed costs. Round to the nearest $10,000. $ Question 12 Use the linear regression models above to answer this question. Estimate the variable cost per treadmill. Round to the nearest dollar. per treadmill produced

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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