Below Are Cost and Activity Data for a Particular Cost

question 7

Essay

Below are cost and activity data for a particular cost over the last four periods.Your boss has asked you to analyze this cost so that management will have a better understanding of how this cost changes in response to changes in activity.

$\begin{array}{cc}&\text { Activity } & \text { Cost } \\\text { Period 1}&46 & \$ 292 \\\text {Period 2 }&40 & \$ 271 \\\text {Period 3 }&42 & \$ 279 \\\text {Period 4 }&41 & \$ 267\end{array}$

Required:
Using the least-squares regression method,estimate the cost formula for this cost.

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Definitions:

Capital Markets

Financial markets where long-term debt and equity securities are bought and sold.

Derivatives

Financial instruments whose value is based on the value of an underlying asset, index, or security.

Forward Contracts

A financial agreement to buy or sell an asset at a specific future date for a price agreed upon today.

Buyer

An individual or entity that acquires goods or services in exchange for payment.