(Appendix 2A)Escalona 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.

Question

(Appendix 2A)Escalona 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.

Quizplus · Accepted Answer

The Answer is The solution using Microsoft Excel functions is:
Variable cost per title printed = Slope = $79.33
Fixed cost per month = Intercept = $1, 826
The solution using the formulas in the text is:
n = 8
sumX = 209
sumY = $31, 187
sumXY = $835, 931
sumX2 = 5, 727
b = [n(sumXY)- (sumX)(sumY)]/[n(sumX^2)- (sumX)^2]
= [8($835, 931)- (209)($31, 187)]/[8(5, 727)- (209)^2]
= $79.33
a = [(sumY)- b(sumX)]/n
= [($31, 187)- $79.33(209)]/8
= $1, 826
Any difference in the solutions is due to rounding errors when the formulas are used.