Serenity Living manufactures gas fireplaces for home use. Each unit produced goes through a complex quality control process. The company has observed quality control costs as follows over the past 16 weeks: Week THEEREECOVASAWN 10 11 12 13 14 15 16 Units Produced 28 19 34 16 22 31 24 25 Fixed cost Variable cost 21 23 26 33 30 18 20 36 Total Quality Control Costs $ 580 $ 470 $ 750 $ 450 $ 500 $ 680 $586 $ 598 $ 518 $ 550 $ 611 $ 722 $ 666 For planning purposes, the company's management wants to know the amount of variable quality control costs per unit and the total fixed quality control costs per week. Total expected cost $458 $503 $ 705 Required: 1. Using the least-squares regression method, estimate the variable and fixed elements of the quality control cost. (Round variable cost to 2 decimal places.) per unit 2. If the company produces 24 gas fireplaces next week, what are the expected total quality control costs? (Round Intermediate and final value to 2 decimal places.)

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Serenity Living manufactures gas fireplaces for home use. Each unit produced goes through a complex quality control process. The
company has observed quality control costs as follows over the past 16 weeks:
Week
SEGOVANAWNH
1
10
11
12
13
14
15
16
Units
Produced
28
19
34
16
22
31
24
25
21
23
26
33
30
18
20
36
Fixed cost
Variable cost
Total Quality
Control Costs
$ 580
$ 478
$ 750
$450
$ 500
$ 688
$586
$598
$518
$ 550
For planning purposes, the company's management wants to know the amount of variable quality control costs per unit and the total
fixed quality control costs per week.
Total expected cost
$611
$722
$666
$458
$ 503
$ 705
Required:
1. Using the least-squares regression method, estimate the variable and fixed elements of the quality control cost. (Round variable
cost to 2 decimal places.)
per unit
2. If the company produces 24 gas fireplaces next week, what are the expected total quality control costs? (Round Intermediate and
final value to 2 decimal places.)
Transcribed Image Text:Serenity Living manufactures gas fireplaces for home use. Each unit produced goes through a complex quality control process. The company has observed quality control costs as follows over the past 16 weeks: Week SEGOVANAWNH 1 10 11 12 13 14 15 16 Units Produced 28 19 34 16 22 31 24 25 21 23 26 33 30 18 20 36 Fixed cost Variable cost Total Quality Control Costs $ 580 $ 478 $ 750 $450 $ 500 $ 688 $586 $598 $518 $ 550 For planning purposes, the company's management wants to know the amount of variable quality control costs per unit and the total fixed quality control costs per week. Total expected cost $611 $722 $666 $458 $ 503 $ 705 Required: 1. Using the least-squares regression method, estimate the variable and fixed elements of the quality control cost. (Round variable cost to 2 decimal places.) per unit 2. If the company produces 24 gas fireplaces next week, what are the expected total quality control costs? (Round Intermediate and final value to 2 decimal places.)
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