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16. Using the least-squares regression method, the estimate of the fixed component of
maintenance cost per month is closest to:
2A-15
17. The Stephens Leadership Center provides training seminars in personal development and
time management. The company is relatively new and management is seeking information
regarding the Center's cost structure. The following information has been gathered since the
inception of the business in January of the current year:
Required:
a. Using the high-low method, estimate the variable cost per seminar and the total fixed cost per
month.
b. Using the least-squares method, estimate the variable cost per seminar and the total fixed
cost per month.
18. Dillenbeck Printing Corp., a book printer, has provided the following data:
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.
2A-19
19. Below are cost and activity data for a particular cost over the last four periods. Your boss
has asked you to analyze this cost so that management will have a better understanding of how
this cost changes in response to changes in activity.
Required:
Using the least-squares regression method, estimate the cost formula for this cost.
2A-20
20. Executive Training, Inc., provides a personal development seminar that is popular with
many companies. The number of seminars offered over the last five months, along with the total
costs of offering these seminars, follows:
Required:
a. Using the high-low method, estimate the variable cost per seminar and the total fixed cost per
month.
b. Using the least-squares regression method, compute the variable cost per seminar and the
total fixed cost per month. (Round off to the nearest whole dollar.)
2A-21
21. Galarneau Inc. maintains a call center to take orders, answer questions, and handle
complaints. The costs of the call center for a number of recent months are listed below:
Management believes that the cost of the call center is a mixed cost that depends on the number
of calls taken.
Required:
Estimate the variable cost per call and fixed cost per month using the least-squares regression
method.
2A-24
22. The management of Ferriman Corporation would like to better understand the behavior of
the company's warranty costs. Those costs are listed below for a number of recent months:
Management believes that warranty cost is a mixed cost that depends on the number of product
returns.
Required:
Estimate the variable cost per product return and the fixed cost per month using the least-
squares regression method.
