Furlan Printing Corp., a book printer, has provided the following data: Titles PrintedPress Setup CostMay40 $6,649June38 $6,438July25 $5,307August28 $5,564September33 $6,030October27 $5,505November39 $6,551December36 $6,275 Management believes that the press setup cost is a mixed cost that depends on the number of titles printed. (A specific book that is to be printed is called a "title". Typically, thousands of copies will be printed of each title. Specific steps must be taken to setup the presses for printing each title-for example, changing the printing plates. The costs of these steps are the press setup costs.) Required:Estimate the variable cost per title printed and the fixed cost per month using the least-squares regression method.
What will be an ideal response?
The solution using Microsoft Excel functions is:
Variable cost per title printed = Slope = $88.21
Fixed cost per month = Intercept = $3,107
The solution using the formulas in the text is:
n = 8
?X = 266
?Y = $48,319
?XY = $1,628,085
?X2 = 9,088
b = [n(?XY) ? (?X)(?Y)]/[n(?X2) ? (?X)2]
= [8($1,628,085) ? (266)($48,319)]/[8(9,088) ? (266)2]
= $88.21
a = [(?Y) ? b(?X)]/n
= [($48,319) ? $88.21(266)]/8
= $3,107
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