Graber and Johnson, Attorney's at Law, Recently Opened a Law

question 117

Essay

Graber and Johnson, Attorney's at Law, recently opened a law practice in the Northwest. Their goal is to generate a monthly net income of $10,000. They have initially set their billing rate at $150 per hour. Their billable hours in the first month of operations (January) were 150 and in the second month of operations (February), 175 billable hours. The costs incurred at these levels for January and February are given below.
Required:

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Definitions:

Exponential Smoothing

It is a rule of thumb technique for smoothing time series data using the exponential window function.

Additive Model

A statistical model where the effect of variables is linear and additive, assuming each variable contributes a separate and additive amount to the final outcome.

Exponential Smoothing Model

A time series forecasting method that applies weighted averages of past observations, decreasing exponentially as the observations get older.

Mean Square Error

A statistical measure used to evaluate the accuracy of a model by calculating the average squared difference between the estimated values and the actual value.