Analyzing Mixed Costs Using Scattergraph, High-Low Method, and Least-Squares Regression
Aspen, Inc., manufactures one model of computer desk. The following data are available regarding units shipped and total shipping costs.
Month | Number of Units Shipped | Total Shipping Cost |
January | 30 | $3,600 |
February | 60 | 2,300 |
March | 40 | 1,700 |
April | 20 | 1,200 |
May | 70 | 2,300 |
June | 80 | 2,700 |
July | 50 | 2,000 |
Required:
1. Prepare a scattergraph of Aspen’s shipping cost and draw the line you believe best fits the data.
2. Based on this graph, estimate Aspen’s total fixed shipping costs per month.
3. Using the high-low method, calculate Aspen’s total fixed shipping costs and variable shipping cost per unit.
4. Perform a least-squares regression analysis on Aspen’s data.
5. Using the regression output, create a linear equation (Y = A + BX) for estimating Aspen’s shipping costs.
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