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:
     

         

    

     

Based on the results of the high-low analysis, the estimate of administrative costs in a month with 1,000 credit hours would be: (rounded to the nearest whole dollar)

$179,620.

$239,430.

$240,760.

$214,050.

Administrative Credit   Month Costs Hours   July $ 128,672     343                August 83,140     235                September 225,855     1,477                October 216,543     1,083                November 258,237     1,372                December 185,224     1,333                January 219,845     1,409                February 245,243     1,327                March 210,420     1,134                April 192,452     1,250                May 249,490     1,554                June 170,707     548                July 127,547     357                           Total $ 2,513,375     13,422                Average 193,337     1,032             

Explanation / Answer

Here the regression equation is

Administrative Costs=89,132.11103 + 100.9281446 *Credit Hours

Now,

the estimate of administrative costs in a month with 1,000 credit hours would be

=89,132.11103 + 100.9281446 *1000

=19006

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