An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing operation. Consider the following sample of production volumes and total cost data for a manufacturing operation.

Production Volume Total Cost
(Units) ($)
400 4,000
450 5,000
550 5,400
600 5,900
700 6,400
750 7,000

Use the data to develop an estimated regression equation that could be used to predict the total cost for a given production volume.

what is the variable cost per unit produced

compute the coefficient of determination what percentage of the variation in total cost can be explained by production volume

the companys production schedule shows 500 units must be produced next month what is the estimated total cost of this operation.