The company uses the number of professional hours as the cost driver for office support costs. Use an algebraic equation to describe how total office support costs can be estimated. Use a spreadsheet program to perform a regression analysis. Use office support costs as the dependent variable (Y) and the professional hours as the independent variable (X). Determine the total fixed cost per office and variable cost per professional
The company uses the number of professional hours as the cost driver for office support costs. Use an algebraic equation to describe how total office support costs can be estimated. Use a spreadsheet program to perform a regression analysis. Use office support costs as the dependent variable (Y) and the professional hours as the independent variable (X). Determine the total fixed cost per office and variable cost per professional
The company uses the number of professional hours as the cost driver for office support costs. Use an algebraic equation to describe how total office support costs can be estimated. Use a spreadsheet program to perform a regression analysis. Use office support costs as the dependent variable (Y) and the professional hours as the independent variable (X). Determine the total fixed cost per office and variable cost per professional
The company uses the number of professional hours as the cost driver for office support costs. Use an algebraic equation to describe how total office support costs can be estimated.
Use a spreadsheet program to perform a regression analysis. Use office support costs as the dependent variable (Y) and the professional hours as the independent variable (X). Determine the total fixed cost per office and variable cost per professional hour.
Identify the R2 statistic provided by the Excel program and explain what it means.
Mr. Dean plans to open a new branch office in a Dallas suburb. He expects that the monthly professional hours will be 3,000. Estimate the total office support cost for Mr. Dean. What portion of the total cost is fixed and what portion is variable?
Explain how multiple regression analysis could be used to improve the accuracy of the cost estimates.
*You will use excel to setup a worksheet with your data and run regression analysis.*
Transcribed Image Text:Problem 2-28A Estimating fixed and variable cost using the regression method
Dean and Powell Tax Services Company has 31 branch offices in the nation. Each office has about three to six
professional accountants and one to two secretaries. In a busy season, the office manager, who is also a
professional accountant, can hire temporary employees for support work such as document filing and typing.
Norman Dean, the president, is wondering whether he should expand his business by opening more offices.
One of the factors that he is considering is how to estimate office support costs. Andrea Jones, the accountant,
collected the following cost data for all 31 offices.
Definition Definition Statistical method that estimates the relationship between a dependent variable and one or more independent variables. In regression analysis, dependent variables are called outcome variables and independent variables are called predictors.
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