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
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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.
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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.
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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?
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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.*
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