Question: Refer to the information from Exercise. Use spreadsheet software to use ordinary least-squares regression to estimate the cost equation, including fixed and variable cost amounts.
Exercise: Felix & Co. reports the following information about its sales and cost of sales. Draw an estimated line of cost behavior using a scatter diagram, and compute fixed costs and variable costs per unit sold. Then use the high-low method to estimate the fixed and variable components of the cost of sales.
Units Cost of
Period Sold Sales
1 . . . . . . . . . . . . . . 0 $2,500
2 . . . . . . . . . . . . . . 400 3,100
3 . . . . . . . . . . . . . . 800 3,700
4 . . . . . . . . . . . . . . 1,200 4,300
5 . . . . . . . . . . . . . . 1,600 4,900
6 . . . . . . . . . . . . . 2,000 5,500
7 . . . . . . . . . . . . . 2,400 6,100
8 . . . . . . . . . . . . . 2,800 6,700
9 . . . . . . . . . . . . . 3,200 7,300
10 . . . . . . . . . . . . . 3,600 7,900