Question

George Caloz & Frères, located in Grenchen, Switzerland, makes prestige high-end custom watches in small lots. One of the company’s products, a platinum diving watch, goes through an etching process. The company has observed etching costs as follows over the last six weeks:

Week	Units			Total Etching Cost
1		10		$	27
2		7		$	20
3		12		$	31
4		6		$	20
5		8		$	24
6		11		$	30
		54		$	152

For planning purposes, management would like to know the amount of variable etching cost
per unit and the total fixed etching cost per week.

Required:

1. Prepare a scattergraph plot. (Place etching costs on the vertical axis and units on the horizontal
axis.)

Using the least-squares regression method, estimate the variable and fixed elements of etching cost. (Round your answers to 2 decimal places.)

Fixed Cost

Variable cost per unit

Express the cost data in (2a) above in the form Y = a + bX. (Round your answers to 2 decimal places.)

Y= +

If the company processes nine units next week, what would be the expected total etching cost? (Round your intermediate and final answers to 2 decimal places.)

Variable cost

Fixed cost

Total expected cost

Answer 1