Question

Odessa, Inc., manufactures one model of computer desk. The following data are available regarding units shipped and total shipping costs: Number Total of Units Shipping Cost Month Shipped 3500 2.500 February 75 March 45 June July 80 4.000 50 3,450 Required: 1. Prepare a scattergraph of Odessa's shipping cost and draw the line you believe best fits the data. Instructions: 1. Use the point tool (7 points) to plot each Units Shipped / Total cost combination. 2. To enter exact coordinates, double click on the point and enter the values for each Units Shipped and Total Cost Scattergraph-Cost of Shipping Jan Feb 456 Ma 35ce April May June 10 10e July Number fUnits Shipped reset 3. Using the high-low method, calculate Odessa's total fixed shipping costs and variable shipping cost per unit. (Round your intermediate calculations 2 decimal places and final answers to the nearest dollar) Fixed Cost Cost ner Unit 4. Perform a least-squares regression analysis on Odessa's data. (Use Microsoft Excel ra statistical package to find the coefficients using least-squares regression. Round your answers to 2 decimal places.) Coefficients Intercept Variable 3. Using the high-low method, calculate Odessa's total fixed shipping costs and variable shipping cost per unit. (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar) Fixed Cost Variable Cost per Unit 4. Perform a least-squares regression analysis on Odessa's data. (Use Microsoft Excel or a statistical package to find the coefficients using least-squares regression. Round your answers to 2 decimal places.) Coefficients Intercept Variable bx) for estimating Odessa's shipping costs. 5. Using the regression output, create a linear equation (y a Total Shipping Co Number Shipped Units +

Answer 1

1. The scatter graph is shown in the attached image below:

Total shipping cost 4,500.00 4,000.00 3,500.00 3,000.00 2,500.00 Total shipping cost 2,000.00 1,500.00 1,000.00 500.00 20.00 40.00 60.00 80.00 100.00

3.

Fixed cost	1600
Variable cost per unit	30

Calculations:

The highest activity units is 80 and the lowest activity units is 25. Cost associated with the highest activity unit of 80 is 4000 and with the lowest activity unit of 25 is 2350.

Thus variable cost per unit = (4000 – 2350)/(80 – 25)

= $30.00

Fixed cost = highest activity cost – (variable cost per unit*highest activity unit)

= 4000 – (30*80)

= 1600

4.

Intercept	1048.93
X variable	35.41

Calculation: The above numbers have been computed using excel's regression function. The output was:

	Coefficients	Standard Error	t Stat	P-value
Intercept	1048.93	562.3068	1.86540599	0.121126
X Variable 1	35.41444	9.746404	3.63359034	0.015004

5. Here intercept is fixed costs and x variable is associated with no. of units shipped. Answer is shown below (as nothing is mentioned i have rounded the figures to 2 decimal places)

Total shipping cost =

1048.93

+

35.41

Number of units shipped