Chapter 5, Problem 9E

To determine

Concept introduction:

Scatter-graph- Scatter-graph is the visual representation of the data on the graph with total costs on the y-axis and level of activity in the x-axis.

Least-square regression- Least square regression method use all the available data to derive the best fitting line which minimizes the sum of squared errors between the data points and the regression line.

High-low method:

High-low method uses the most extreme values to determine the variable and fixed cost based on given trends.

Requirement 1

To prepare:

The scatter-graph and draw the best fitting line

To determine

Concept introduction:

Scatter-graph- Scatter-graph is the visual representation of the data on the graph with total costs on the y-axis and level of activity in the x-axis.

Least-square regression- Least square regression method use all the available data to derive the best fitting line which minimizes the sum of squared errors between the data points and the regression line.

High-low method:

High-low method uses the most extreme values to determine the variable and fixed cost based on given trends.

Requirement 2

To provide

The estimated fixed costs.

To determine

Concept introduction:

Scatter-graph- Scatter-graph is the visual representation of the data on the graph with total costs on the y-axis and level of activity in the x-axis.

Least-square regression- Least square regression method use all the available data to derive the best fitting line which minimizes the sum of squared errors between the data points and the regression line.

High-low method:

High-low method uses the most extreme values to determine the variable and fixed cost based on given trends.

Requirement 3

To compute

Thefixed and variable costs the high low method.

To determine

Concept introduction:

Scatter-graph- Scatter-graph is the visual representation of the data on the graph with total costs on the y-axis and level of activity in the x-axis.

Least-square regression- Least square regression method use all the available data to derive the best fitting line which minimizes the sum of squared errors between the data points and the regression line.

High-low method:

High-low method uses the most extreme values to determine the variable and fixed cost based on given trends.

Requirement 4

To perform

The least square regression analysis on Odessa’s data.

To determine

Concept introduction:

Scatter-graph- Scatter-graph is the visual representation of the data on the graph with total costs on the y-axis and level of activity in the x-axis.

Least-square regression- Least square regression method use all the available data to derive the best fitting line which minimizes the sum of squared errors between the data points and the regression line.

High-low method:

High-low method uses the most extreme values to determine the variable and fixed cost based on given trends.

Requirement 5

The linear cost equation.