The Stanford Company incurred the following maintenance cost during a five month period: $\begin{array}{ccc}\text { Month } &\text { Production Volume } &\text {Maintenance Costs }\\hline
\text { June } & 75 & \$ 250 \
\text { July } & 115 & 310 \
\text { August } & 190 & 400 \
\text { September } & 60 & 240 \
\text { October } & 135 & 355
\end{array}$
Using a computer or calculator, compute the estimate of variable cost per unit of production
Using the method of least squares. Rounded to two decimal places, this value would be
A)$3.21.
B)$2.70.
C)$1.31.
D)$1.23.

Question

Quizplus · Accepted Answer

The least squares method calculates the variable cost per unit by finding the slope of the line that best fits the data points. The slope is calculated as the change in maintenance costs divided by the change in production volume, which results in approximately $1.31 per unit.

The Stanford Company Incurred the Following Maintenance Cost During a Five