After some discussion, Williams thought it would be beneficial to begin her repo

Question

After some discussion, Williams thought it would be beneficial to begin her report with an overview of three different cost estimation tools: scatter diagrams, least-squares regression, and the high-low method. She would then present the results of her analysis of the past year's monthly ticketing cost, which was driven largely by the number of tickets written. These results would be presented in the form of algebraic equations that were derived by the three tools just cited. The equations follow. (C denotes ticketing cost, and PT denotes number of passenger tickets written.) Scatter diagram: C= $385,000 + $2.80PT Least-squares regression: C= $480,000 + $2.85PT High-low method: C= $319,000 + $3.00PT Williams had analyzed data over the past 12 months and built equations on these data, purposely including the slowest month of the year (February) and the busiest month (November) so that things would "tend to average out She observed that November was especially busy because of Thanksgiving, passengers purchasing tickets for upcoming holiday travel in December, and the effects of a strike by Delta Western Airlines, Global American's chief competitor. The lengthy strike resulted in many of Delta Western's passengers being rerouted on Global American flights. Required 3. Assuming the use of least-squares regression, explain what the $480,000 and $2.85 figures represent 4. Assuming the use of a scatter diagram, predict the cost of an upcoming month when Global American expects to write 690,000 tickets. Complete this question by entering your answers in the tabs below Required 3 Required 4 east-squares regression, explain what the $480,000 and $2.85 figures represent. explain Assuming the use of The amount $480,000 represents the The amount $2.85 represents the of ticketing operation per ticket

Explanation / Answer

3) the 480000 represents the fixed cost and it present irrespective of no of passengers tickets and 2.85 is variable cost and it per passenger ticket costs

fixec costs, variable cost
4)cost=385000+(2.8*PT)
=385000+(2.8*690000)=2317000

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