Estimate SHATTA MOVEMENT LTD normal fixed and variable cost of production using linear regression.
Shatta movement LTD produces a single product. The company's directors want to explore new markets, and they require an accurate analysis of the firm's cost structure for both
| Period | output (unit) |
average unit cost (GHS) |
|
July August September October November December |
9,000 14,000 11,000 8,000 6,000 12,000 |
12.8 13 11.4 12 13 11.7 |
You obtain the following further information:
1. The cost from which the averages have been computed consist of the firm's entire cost for the relevant month.
2. Fixed coat can be assumed to be unaffected by seasonal factors except for harmattan heating. In July and August a supplementary heating system was employed; this cost GHS 10,000 per month to operate.
Required:
Estimate SHATTA MOVEMENT LTD normal fixed and variable cost of production using linear regression.
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