Question

July August September October November December Units Produced 18.020 32.032 36,036 22.022 40,040 38,038 Total Cost $41,545 48,048 55,055 42,358 74,575 62,062 Compute the variable and fixed-cost elements using the regression analysis. Present your solution in the form of a cost equation Intercept $ Slope 1.2492 The cost equation is: $ 1.2492 per unit produced - Total cost

Answer 1

Month	Units Produced(X)	Total Cost(Y)(in $)	Square of X	X*Y(in $)
July	18,020	41,545	32,47,20,400	74,86,40,900
Aug	32,032	48,048	1,02,60,49,024	1,53,90,73,536
Sep	36,036	55,055	1,29,85,93,296	1,98,39,61,980
Oct	22,022	42,358	48,49,68,484	93,28,07,876
Nov	40,040	74,575	1,60,32,01,600	2,98,59,83,000
Dec	38,038	62,062	1,44,68,89,444	2,36,07,14,356
Total	1,86,188	3,23,643	6,18,44,22,248	10,55,11,81,648
	Unit Variable Cost (b) = nΣxy − (Σx)(Σy) /nΣx^2 − (Σx)^2		Total Fixed Cost (a) = Σy − bΣx / n
So here n =6 ,Σx =186,188, Σy =323,643, Σx^2=34,66,59,71,344 ,Σxy =63,30,70,89,888
Variable cost per unit(b) =6*10,55,11,81,648 - (186,188*323,643) / 6*34,66,59,71,344 - 186,188^2
Variable cost per unit(b) =63,30,70,89,888 - 60,25,84,42,884 / 37,10,65,33,488 - 34,66,59,71,344
Variable cost per unit(b) =3,04,86,47,004 / 2,44,05,62,144 =$1.2492
Total Fixed cost =323,643- ($1.2492*186,188) / 6
Total Fixed cost =(323,643 - 232,586) / 6
Total Fixed cost =$91,057 /6 =$15,176
The cost volume formula is:
y =$15,176 + $1.25X