Professor John Morton has just been appointed chairperson of theFinance Department at Westland University. In reviewing thedepartmentâs cost records, Professor Morton has found the followingtotal cost associated with Finance 101 over the last severalterms:
Term Number of
Sections Offered Total Cost Fall, lastyear 4 $ 13,000 Winter,last year 3 $ 7,500 Summer,last year 7 $ 13,500 Fall, thisyear 5 $ 10,000 Winter,this year 2 $ 6,500
Professor Morton knows that thereare some variable costs, such as amounts paid to graduateassistants, associated with the course. He would like to have thevariable and fixed costs separated for planning purposes.
Required: 1. Prepare a scattergraphplot. (Place total cost on the vertical axis and number ofsections
offered on the horizontal axis.)
Instructions: 1. On the graphbelow, use the point tool (Fall last year) to plot number ofsections offered on the horizontal axis and total cost on thevertical axis. 2. Repeat the sameprocess for the plotter tools (winter last year to winter thisyear). 3. To enter exactcoordinates, click on the point and enter the values of x andy. 4. To remove apoint from the graph, click on the point and select deleteoption.
2(a). Using the least-squares regression method, estimate the variablecost per section and the total fixed cost per term for Finance 101.(In the calculation, round your fixed cost and variablecost to nearest whole dollars.)
2(b). Express these estimates in the linear equation form Y =a + bX.
3a. Assume that because of the small number of sections offeredduring the Winter Term this year, Professor Morton will have tooffer nine sections of Finance 101 during the Fall Term. Computethe expected total cost for Finance 101. (Round your finalanswer to nearest whole dollar.)
3b. Can you see any problem withusing the cost formula from (2) above to derive this total costfigure? Choose the BEST answer from thefollowing choices:
Prediction is out of the relevantrange. Prediction is based on olddata. Prediction is not guaranteed tobecome actual. Coefficient estimates may have highvariance.
Professor John Morton has just been appointed chairperson of theFinance Department at Westland University. In reviewing thedepartmentâs cost records, Professor Morton has found the followingtotal cost associated with Finance 101 over the last severalterms: |
| Term | Number of Sections Offered | Total Cost | |||
| Fall, lastyear | 4 | $ | 13,000 | ||
| Winter,last year | 3 | $ | 7,500 | ||
| Summer,last year | 7 | $ | 13,500 | ||
| Fall, thisyear | 5 | $ | 10,000 | ||
| Winter,this year | 2 | $ | 6,500 | ||
Professor Morton knows that thereare some variable costs, such as amounts paid to graduateassistants, associated with the course. He would like to have thevariable and fixed costs separated for planning purposes. |
| Required: | |
| 1. | Prepare a scattergraphplot. (Place total cost on the vertical axis and number ofsections offered on the horizontal axis.) |
| Instructions: | |
| 1. | On the graphbelow, use the point tool (Fall last year) to plot number ofsections offered on the horizontal axis and total cost on thevertical axis. |
| 2. | Repeat the sameprocess for the plotter tools (winter last year to winter thisyear). |
| 3. | To enter exactcoordinates, click on the point and enter the values of x andy. |
| 4. | To remove apoint from the graph, click on the point and select deleteoption. |
| 2(a). | Using the least-squares regression method, estimate the variablecost per section and the total fixed cost per term for Finance 101.(In the calculation, round your fixed cost and variablecost to nearest whole dollars.) |
| 2(b). | Express these estimates in the linear equation form Y =a + bX. |
| 3a. | Assume that because of the small number of sections offeredduring the Winter Term this year, Professor Morton will have tooffer nine sections of Finance 101 during the Fall Term. Computethe expected total cost for Finance 101. (Round your finalanswer to nearest whole dollar.) |
| 3b. | Can you see any problem withusing the cost formula from (2) above to derive this total costfigure? |
| Choose the BEST answer from thefollowing choices: |
| Prediction is out of the relevantrange. | |
| Prediction is based on olddata. | |
| Prediction is not guaranteed tobecome actual. | |
| Coefficient estimates may have highvariance. |
