Monthly Cat Castle Delivery & Deliveries Assembly Expense 9 ----------------- $2

Question

Monthly Cat Castle   Delivery &      
Deliveries   Assembly Expense     
9 -----------------   $220   

10 ----------------   $237
     
12 ----------------   $273
     
13 ----------------   $291
     
15 ----------------   $328
     
16 ----------------   $345
     
17 ----------------   $364      

a) Using regression analysis in Excel, what is the company’s estimated total Delivery & Assembly Expense in equation form? If you wish, you may copy and paste the entire graph into your response IN ADDITION to writing/typing out the equation. The graph is not required.

b) Estimate the total cost for 14 deliveries/assemblies in a month using the equation generated by regression analysis. Show work.

c) By how much do the results of the high low equation and the regression equation differ when projecting total costs for 14 deliveries/assemblies? Show your answer as a percentage with two decimal places to the right of the decimal point. (Ex. 12.51% or 0.84% or 7.70%) Show work.

Explanation / Answer

a)

bregression Analysis:

Dependent variable = number of deliveries

Independent variable = Expenses

Based on the above analysis. the regression equation is

Expense = 55.612 + 18.124*(delivery)

b) when number of deliveries = 14,

Expense = 55.612 + 18.124 * 14 = $309.35

c)

High Low Method

variable expense = ($364 - $220) / (17-9) = $18 per delivery

Fixed expense = $220 - 9*$18 = $58

Therefore the equation based on high low method,

Expense = 58 + 18 * (delivery)

When number of deliveries = 14,

Expense = $58 + $18*14 = $310

Difference in two calculation:

Difference = 310 - 309.35 = $0.65

Difference as a percentage = ($0.65 / $309.35)*100 = 0.21%

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