Answer:
y =$115.75 + $8.36X
Explanation:
Calculation for what is the cost formula for this cost Using the least-squares regression method
First step is to calculate the Total amount of Period 1 to Period 4
Month Activity(X) Cost(Y) Square of X X*Y
Period 1 32 $388 $1,024 $12,416
Period 2 31 $377 $961 $11,687
Period 3 30 $362 $ 900 $10,860
Period 4 35 $406 $1,225 $14,210
TOTAL 128 $1,533 $4,110 $49,173
Second step is to calculate Unit Variable Cost using this formula
Unit Variable Cost = nΣxy − (Σx)(Σy) /nΣx^2 − (Σx)^2
Where,
n =4
Σx =128
Σy =1,533
Σx^2=4,110
Σxy =49,173
Let plug in the formula
Variable cost per unit =4*49,173 - (128*1,533) / 4*4,110 - 128^2
Variable cost per unit=(196,692 - 196,224) / (16,440 - 16,384)
Variable cost per unit= 468 / 56
Variable cost per unit=$8.36
The third step is to calculate Total Fixed Cost
Using this formula
Total Fixed Cost = Σy − bΣx / n
Where,
Σy=1,533
bΣx=$8.36*128
n=4
Let plug in the formula
Total Fixed cost =1,533 - ($8.36*128) / 4
Total Fixed cost =(1,533 - 1,070) / 4
Total Fixed cost =$463 / 4
Total Fixed cost =$115.75
Hence,the cost formula for this cost will be:
Cost formula=Total Fixed cost + Variable cost per unit
y =$115.75 + $8.14X
Therefore Using the least-squares regression method, the cost formula for this cost is y =$115.75 + $8.36X
