Textbook Problem

The method of least squares was used to develop a cost equation to predict the cost of receiving purchased parts at a video game manufacturer. Ninety-six data points from monthly data were used for the regression. The following computer output was received:

The cost driver used was number of parts inspected.

Method of Least Squares, Budgeted Time Period Is Different from Time Period Used to Generate Results

Refer to the company information in Exercise 3-49.

Required:

1. 1. What is the cost formula for a year?
2. 2. Using the cost formula from Requirement 1, predict the cost of parts inspection for a year in which 70,000 parts are inspected.