Problem

Analyzing Mixed Costs Using Least-Squares Regression MethodRefer to the information in E5-...

Analyzing Mixed Costs Using Least-Squares Regression Method

Refer to the information in E5-4 regarding Valley Dental.

Required:

1. Perform a least squares regression using Valley’s activity and cost information and state the linear cost equation (Y = A + BX).


2. Explain what each component of the cost equation represents.


3. Do the regression results differ from those obtained using the high-low and scattergraph methods? If so, why?

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