The managing director of a consulting group has the accompanying monthly data on total overhead costs and professional labor hours to bill to clients. Complete parts a through c. Overhead Cost Billable Hours $ 365,000.00 3000 $ 400,000.00 4000 $ 430,000.00 5000 $ 477,000.00 6000 $ 560,000.00 7000 $ 587,000.00 8000 a) Develop a trendline to identify the relationship between billable hours and overhead costs. b) Interpret the coefficients of your regression model. Specifically, what does the fixed component of the model mean to the consulting firm? c) If a special job requiring 1000 billable hours that would contribute a margin of $38,000 before overhead was available, would the job be attractive?
The managing director of a consulting group has the accompanying monthly data on total overhead costs and professional labor hours to bill to clients. Complete parts a through c. Overhead Cost Billable Hours $ 365,000.00 3000 $ 400,000.00 4000 $ 430,000.00 5000 $ 477,000.00 6000 $ 560,000.00 7000 $ 587,000.00 8000 a) Develop a trendline to identify the relationship between billable hours and overhead costs. b) Interpret the coefficients of your regression model. Specifically, what does the fixed component of the model mean to the consulting firm? c) If a special job requiring 1000 billable hours that would contribute a margin of $38,000 before overhead was available, would the job be attractive?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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The managing director of a consulting group has the accompanying monthly data on total overhead costs and professional labor hours to bill to clients. Complete parts a through c.
| Overhead Cost | Billable Hours |
| $ 365,000.00 | 3000 |
| $ 400,000.00 | 4000 |
| $ 430,000.00 | 5000 |
| $ 477,000.00 | 6000 |
| $ 560,000.00 | 7000 |
| $ 587,000.00 | 8000 |
a) Develop a trendline to identify the relationship between billable hours and overhead costs.
b) Interpret the coefficients of your regression model. Specifically, what does the fixed component of the model mean to the consulting firm?
c) If a special job requiring 1000 billable hours that would contribute a margin of $38,000 before overhead was available, would the job be attractive?
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