The Business School at Eastern College is accumulating data as a first step in t

Question

The Business School at Eastern College is accumulating data as a first step in the preparation of next year's budget development. One cost that is being looked at closely is administrative costs as a function of student credit hours. Data on administrative costs and credit hours for the past thirteen months are shown below:

          
The controller's office has analyzed the data and has given you the results from the regression analysis:
  

Cost = $18,382.00.

Cost = $100,624.21.

Cost = $193,064.00.

Cost = $98.52.

The Business School at Eastern College is accumulating data as a first step in the preparation of next year's budget development. One cost that is being looked at closely is administrative costs as a function of student credit hours. Data on administrative costs and credit hours for the past thirteen months are shown below:

Explanation / Answer

In Regression analysis: Total Cost(Y) = Variable Cost*X + Fixed Cost(Intercept), so estimated fixed portion of administrative salaries is the Intercept coefficient i.e. Cost = $100,624.21

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