Stamp Printing Corp

question 20

Essay

Stamp Printing Corp. ,a book printer,has provided the following data:
Management believes that the press setup cost is a mixed cost that depends on the number of titles printed.(A specific book that is to be printed is called a "title".Typically,thousands of copies will be printed of each title.Specific steps must be taken to setup the presses for printing each title-for example,changing the printing plates.The costs of these steps are the press setup costs. )
Required:
Estimate the variable cost per title printed and the fixed cost per month using the least-squares regression method.
$\begin{array}{c}\begin{array}{lll}\\ \text { February.............}\\ \text { March..................}\\ \text { April....................}\\ \text { May.....................}\\ \text { June.....................}\\ \text { July......................}\\ \text { Augus...................}\\ \text { September............}\end{array}\begin{array}{cc}\text { Titles Printed } & \text { Press Setup Cost } \\39 & \$ 2,197 \\40 & \$ 2,218 \\36 & \$ 2,134 \\31 & \$ 2,044 \\48 & \$ 2,424 \\47 & \$ 2,377 \\29 & \$ 1,997 \\45 & \$ 2,353\end{array}\end{array}$

---

Definitions:

Investor Returns

The gain or loss on an investment over a specified period, usually expressed as a percentage of the investment's initial cost.

Capital Components

The various sources of funding a company uses to finance its operations, including debt, equity, and any hybrid instruments.

Cost of Capital

The essential return needed to justify the investment in a capital budgeting project, like constructing a new manufacturing facility.

Market Value

Today's market rate for the purchase or sale of services or assets.