Question

Please answer ALL the parts correctly and completely. Thank you!

Anne Colton has a renovation business which uses painters to do custom paint jobs for house exteriors. She is trying to get a better idea of her cost structure to be able to bid on contracts as there has been new competition entering her neighbourhood from the downtown area. She has traditionally used the square footage of the houses she’s worked on; but noticed that the amount of time taken also differed on the last 2 projects which had a lot of windows and doors, which requires a lot more preparation work.

                    Information for her last 12 jobs are as follows:

House	Square Footage	Windows & Doors	Cost
1	2,600	13	$3,335
2	3,010	15	3,742
3	2,800	12	3,100
4	2,850	12	3,150
5	4,600	19	4,700
6	2,700	13	3,225
7	2,375	11	2,920
8	2,450	11	2,836
9	2,600	10	2,945
10	3,700	16	4,112
11	2,650	13	3,210
12	3,550	16	3,965

Required:

1. How much would Anne charge for a house with 3,300 square feet and 14 openings, based on:

1. high-low method, based on square footage.
2. high-low method, based on number of windows.
3. regression analysis, based on square footage.
4. regression analysis, based on number of windows.

2. Which method do you recommend? Explain your answer.
3. What other considerations should Anne take into account? Explain.

Answer 1

High low method formula is = Change in cost/Change in units.

I will give solution in hand-written notes please find that attachment for solution.