QUESTION 4Least-Squares RegressionSerenity Living manufactures gas fireplaces for home use. Each unit produced goes through a complex quality control process. The company has observed quality control costs as follows over the past six weeks:TotalUnits Quality ControlWeek Produced Costs1 24 $5402 15 $4003 30 $6204 12 $3805 18 $4806 27 $580For planning purposes, the company’s management wants to know the amount of variable quality control costs per unit and the total fixed quality control costs per week.Required:1.Using the least-squares regression method, estimate the variable and fixed elements of the quality control cost.2.Express the cost data in (1) above in the form Y = a + bX.3.If the company produces 20 gas fireplaces next week, what would be the expected total quality control costs?4.Evaluate the economic plausibility of using units produced to predict total quality control costs.
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