George Caloz & FrA?res, located in Grenchen, Switzerland, makes prestige high end custom watches in small lots. One of the company’s products, a platinum diving watch, goes through an etching process. The company has observed etching costs (expressed in Swiss Francs. SFr) as follows over the last six weeks:
For planning purposes, management would like to know the amount of variable etching cost per unit and the total fixed etching cost per week.
Required:
1. Using the least squares regression method, estimate the variable and fixed elements of etching cost.
2. Express the cost data in (1) above in the form Y = a + bX.
3. If the company processes five units next week, what would be the expected total etchingcost?