Yates Corp Required:
(A

question 99

Essay

Yates Corp.wants to develop a cost equation for its administrative costs.The controller believes the appropriate cost driver is units produced.Last year's data are presented below:
$$\begin{array} { | l | r | r | } \hline \text { Month } & \begin{array} { r } \text { Units } \\\text { produced }\end{array} & \begin{array} { r } \text { Acministrative } \\\text { Costs }\end{array} \\\hline \text { January } & 32,500 & \$ 24,288 \\\hline \text { February } & 37,700 & 27,720 \\\hline \text { March } & 24,700 & 17,820 \\\hline \text { April } & 40,300 & 30,360 \\\hline \text { May } & 49,400 & 37,290 \\\hline \text { June } & 42,900 & 29,040 \\\hline \text { Juby } & 53,300 & 32,670 \\\hline \text { August } & 45,500 & 30,030 \\\hline \text { September } & 26,000 & 20,460 \\\hline \text { October } & 48,100 & 34,320 \\\hline \text { November } & 61,100 & 40,920 \\\hline \text { December } & 54,600 & 36,630 \\\hline\end{array}$$



Required:
(a. )What is the equation for administrative costs using the regression analysis?
(b. )Does the variable "units produced" have statistical significance? Explain.(c. )Prepare an estimate of administrative costs for a month when 30,000 units are produced.

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Definitions:

Liquidity

The ability of a company to pay obligations expected to be due within the next year.

Dividend Payments

Dividend payments are distributions of a portion of a company's earnings, decided by the board of directors, to its shareholders.

Trend Analysis

The practice of collecting information and attempting to spot a pattern, often used in financial markets or statistical data analysis.

Horizontal Analysis

An analytical method in financial statements analysis where amounts in a series of financial statements are compared line by line to detect changes and trends over different periods.