Dillenbeck Printing Cor., a book printer, has provided the following data: Title

Question

Dillenbeck Printing Cor., a book printer, has provided the following data:

Titles Printed Press Setup Cost

February

Dillenbeck Printing Cor., a book printer, has provided the following data: Management believes that the cost of the call center 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.) Estimate the variable cost per title printed and the fixed cost per month using the least-squares regression method

Explanation / Answer

Hi,

Please find the answer as follows:

SUM X = 309

SUM Y = 27214

SUM XY = 1062203

SUM X^2 = 12215

N = 8

Variable Cost (b) = [N*(SumXY) - SUMX*SUMY)]/[N(SUMX^2 - (SUMX)^2]

= [8*(1062203 - 309*27214)]/[8*12215 - (309)^2]

Variable Cost Per Unit (b) = 39.53

Fixed Cost = (SUMY - b*SUMX)/n

= (27214 - 39.53*309)/8 = 1874.90 or 1875

Answers are Variable Cost = 39.53 and Fixed Cost = 1875

Thanks.

X Y XY X^2 February 33 3170 104610 1089 March 34 3203 108902 1156 April 46 3688 169648 2116 May 28 2996 83888 784 June 44 3607 158708 1936 July 42 3551 149142 1764 August 43 3586 154198 1849 September 39 3413 133107 1521 Total 309 27214 1062203 12215

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