Tempe Office Services and Supplies (TOSS) provides various products and services

Question

Tempe Office Services and Supplies (TOSS) provides various products and services in the Tempe Research Park, home to numerous high-tech and bio-tech companies. Making color copies is one of its most popular and profitable services. The controller performed a regression analysis of data from the Color Copy Department with the following results:

Tempe Office Services and Supplies (TOSS) provides various products and services in the Tempe Research Park, home to numerous high-tech and bio tech companies. Making color copies is one of its most popular and profitable services. The controller performed a regression analysis of data from the Color Copy Department with the following results 238.69 968 Intercept R square Number of observations X coefficient 069 The regression output was based on the following data Color Copy Number of Dapartment Month July August September October November Color Copies 17,000 21,250 22,950 18,700 20,400 25.500 Costs $1,445 1,658 1,785 1,530 1,615 2,040 Required 1. What is the variable cost per color copy for TOSS? (Enter your answer in cents, rounded to 1 decimal place (i.e., $0.076 should be entered as 7.6)). per color copy (in cents) 2. What is the fxed cost for the Color Copy Department? (Round your answer to 2 decimal places.) Fixed Cost per Month

Explanation / Answer

1. Variable cost: 6.9 per color copy (in cents)

2. Fixed cost: $238.69 per month

3. Total cost = $238.69 + $0.069 per number of color copies

5-a.

Variable cost per color copy = $595/8500 = $0.07 per color copy

Fixed cost (at the high point) = $2040 - ($0.07 x 25500) = $2040 - $1785 = $255

Fixed cost (at the low point) = $1445 - ($0.07 x 17000) = $1445 - $1190 = $255

5-b. Total cost = $255.00 + $0.07 per number of color copies

6.

Regression: $238.69 + ($0.069 x 22100) = $238.69 + $1524.90 = $1763.59

High-Low: $255 + ($0.07 x 22100) = $255 + $1547 = $1802.00

Variable cost per color copy $ 0.07 Fixed cost $255.00

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