Short-Term Decision-Making

Refer to the monthly production cost data for Alta Production, Inc., in Note 5.21 "Review Problem 5.5". Use the four steps of regression analysis described in this appendix to estimate total fixed costs and variable cost per unit. State your results in the equation form Y = f + vX.

Solution to Review Problem 5.9

Regression analysis performed using Excel results in the following output:

Thus the total cost equation is:

Y = $703 + $1,442.97X