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High-Low, Registration Analysis

On November 15, 2009, Sandra Cook, a newly hired cost analyst at Demgren Company, was asked to predict overhead costs for the companyĆ¢??s operations in 2010 when 510 unites are expected to be produced. She collected the following quarterly data:
Quarter Production In Units Overhead Costs
1/06 76 $721
2/06 79 715
3/06 71 649
4/06 136 1,131
1/07 125 1,001
2/07 128 1,111
3/07 125 1,119
4/07 133 1,042
1/08 124 997
2/08 129 1,066
3/08 115 996
4/08 84 957
1/09 84 835
2/09 122 1,050
3/09 90 991

1) Using the high-low method to estimate costs, prepare a prediction of overhead costs for 2010
2) Sandy ran a regressing analysis using the data she collected. The result was
Y=$355 +$ 5.77 X
Using this cost function, predict overhead costs for 2010
3) Which prediction do you prefer? Why?

Solution Summary

The solution discusses high-low, registration analysis.

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