Reference no: EM132478538

Serenity Living manufactures gas fireplaces for home use. Each unit produced goes through a complex quality control process. The company has observed quality control costs as follows over the past 16 weeks:

WeekUnits

ProducedTotal

Quality Control

Costs

1 24 $540

2 15 $400

3 30 $620

4 12 $380

5 18 $480

6 27 $580

7 20 $500

8 21 $511

9 17 $442

10 19 $469

11 22 $521

12 29 $616

13 26 $569

14 14 $391

15 16 $430

16 28 $602

For planning purposes, the company's management wants to know the amount of variable quality control costs per unit and the total fixed quality control costs per week.

Required:

Question 1. Using the least-squares regression method, estimate the variable and fixed elements of the quality control cost. (Round the "variable cost" to 2 decimal places.)

Question 2. If the company produces 20 gas fireplaces next week, what are the expected total quality control costs? (Round intermediate and final value to 2 decimal places.)