(Appendix 2A)Cespedes Inc.'s inspection costs are listed below: Management believes that inspection cost is a mixed cost that depends on units produced. Using the least-squares regression method, the estimate of the fixed component of inspection cost per month is closest to:
A)$6, 983
B)$10, 342
C)$10, 527
D)$6, 972

Question

(Appendix 2A)Cespedes Inc.'s inspection costs are listed below:  Management believes that inspection cost is a mixed cost that depends on units produced. Using the least-squares regression method, the estimate of the fixed component of inspection cost per month is closest to:
A)$6, 983 
B)$10, 342 
C)$10, 527 
D)$6, 972

Quizplus · Accepted Answer

Using Microsoft Excel functions, the solution is:
Fixed cost per month = Intercept = $6, 972