A facility manager asked for information to help in forecasting handling costs. The following printout was generated using the least squares regression method:
Fixed cost: $2550
Variable cost per unit: 1.85
Activity variable: units of production volume
a. Using the info from the printout, develop a cost function that can be used to estimate handling costs at different volume levels.
b. Estimate handling costs if the expected production for next month is 20,000 units.
In this problem:
<br>y = Handling costs.
<br>a = Fixed cost = $2,550.
<br>b = Variable ...
This solution sets up a cost function.