Connie Harris,in Charge of Office Supplies at First Capital Mortgage

question 36

Essay

Connie Harris,in charge of office supplies at First Capital Mortgage Corp. ,would like to predict the quantity of paper used in the office photocopying machines per month.She believes that the number of loans originated in a month influence the volume of photocopying performed.She has compiled the following recent monthly data:

a.Develop the least-squares estimated regression equation that relates sheets of photocopy paper used to loans originated.
b.Use the regression equation developed in part (a)to forecast the amount of paper used in a month when 65 loan originations are expected.

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Definitions:

Unit Contribution Margin

The measured profit that each unit sold contributes toward fixed costs and profit, calculated by subtracting variable costs from the sales price per unit.

Operating Income

Earnings before interest and taxes (EBIT), which represents the profit a company earns from its core operations.

Fixed Costs

Overhead expenses that remain constant regardless of the volume of activity or production levels within a company.

Cost-volume-profit Analysis

An accounting tool used to determine the effects of changes in costs and volume on a company's profits.