Strain Corporation currently has a plant capacity (i.e., relevant range) to produce 5,000 units per month. Their accounting department has used regression analysis to determine their cost structure and this analysis has resulted in the following:
Total costs = $3,582 + $4.26X.
Required:
1) What are the estimated total costs for a month in which 4,000 units will be produced?
2) What are the estimated fixed costs for a month in which 4,000 units will be produced?
3) What are the estimated total variable costs for a month in which 4,000 units will be produced?
4) During the month of December, Strain estimates that they will need to produce 6,000 units to meet customer demand. What problems might result from trying to predict the total cost incurred using the regression equation listed above?

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The Answer of Strain Corporation currently has a plant capacity (i.e., relevant range) to produce 5,000 units per month. Their accounting department has used regression analysis to determine their cost structure and this analysis has resulted in the following:
Total costs = $3,582 + $4.26X.
Required:
1) What are the estimated total costs for a month in which 4,000 units will be produced?
2) What are the estimated fixed costs for a month in which 4,000 units will be produced?
3) What are the estimated total variable costs for a month in which 4,000 units will be produced?
4) During the month of December, Strain estimates that they will need to produce 6,000 units to meet customer demand. What problems might result from trying to predict the total cost incurred using the regression equation listed above?

Strain Corporation Currently Has a Plant Capacity (I