(Appendix 3A)The Stephens Leadership Centre Provides Training Seminars in Personal

question 15

Essay

(Appendix 3A)The Stephens Leadership Centre provides training seminars in personal development and time management.The company is relatively new and management is seeking information regarding the Centre's cost structure.The following information has been gathered since the inception of the business in January of the current year:
$\begin{array}{|l|r|r|}\hline & \text { Seminars offered } & \text { Costs incurred } \\\hline \text { January } & 10 & \$ 17,000 \\\hline \text { February } & 12 & 18,800 \\\hline \text { March } & 15 & 20,900 \\\hline \text { April } & 18 & 23,762 \\\hline \text { May } & 16 & 21,800 \\\hline \text { June } & 13 & 19,400 \\\hline\end{array}$
Required:
a.Using the high-low method,estimate the variable cost per seminar and the total fixed cost per month.
b.Using the least-squares regression method and the equations for a and b,estimate the variable cost per seminar and the total fixed cost per month.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, crucial in determining the value of investments.

Real Risk-free Rate

The theoretical return on an investment with zero risk, taking into account the effects of inflation, thus representing the true purchasing power of the investment return.

Expected Inflation

The anticipated rate at which the general level of prices for goods and services will rise over a period of time.

Dividend-payout Ratio

A financial ratio that shows the percentage of a company's earnings paid to shareholders in the form of dividends, reflecting a company's dividend policy.