Question

[The following information applies to the questions displayed below.] Professor John Morton has just been appointed chairperson of the Finance Department at Westland University. In reviewing the department’s cost records, Professor Morton has found the following total cost associated with Finance 101 over the last five terms: Term Number of Sections Offered Total Cost Fall, last year 5 $ 11,000 Winter, last year 6 $ 12,000 Summer, last year 2 $ 6,000 Fall, this year 3 $ 10,500 Winter, this year 7 $ 14,000 Professor Morton knows that there are some variable costs, such as amounts paid to graduate assistants, associated with the course. He would like to have the variable and fixed costs separated for planning purposes. 2-a. Using the least-squares regression method, estimate the variable cost per section and the total fixed cost per term for Finance 101. 2-b. Express these estimates in the form Y = a + bX.

Answer 1