Multiple regression. The managers of Peterson\'s Catering Company are analyzing the costs involved in providing catering services. Managers have selected the following cost drivers: units of meals produced, total deliveries, number of VIP services, number of new customers, and new products developed. Here are the cost data and levels of cost driver activity for the past 16 months. 3 Month Total Overhead Meals Deliveries VIP New New Produced Services Customers Products 69,094.00 12,690.00 1,340.00$345.00 64,927.00 11,980.00 1,180.00$310.00 60,332.00 10,950.00 1,050.00$280.00 57,953.00$10,280.00 930.00 245.00 55,984.00$9,020.00840.00 $205.00 53,119.008,130.00 780.00 185.00 52,706.00$7,540.00 700.00160.00 630.00 144.00 53,445.008,930.00 680.00135.00 54,869.009,800.00$ 760.00 120.00 59,985.00$10,560.00 890.00 75.00 61,121.00 11,560.00 1,070.00$200.00 63,926.00 11,710.00 1,240.00$240.00 66,602.00 12,460.00 1,390.00$285.00 72,773.00 13,520.00 1,450.00$330.00 71,391.00 13,620.00 1,510.00$315.00 972,101.00 169,730.00 16,440.00$3,674.00 10 53,874.00 6,980.00 6 2 $ 1 10 10 14 16 Totals 103 17 Solution a) The regression equation can be written as : Costs = $12,414 + $2.34 Meals + $9.36 Deliveries + $32.91 VIP Services + $831.18 New Customers + $932.51 New Products Therefore, the cost driver rates are: Meals ........................................................... $2.34 per Meal Deliveries .................................................... $9.36 per Delivery VIP Services .............................................. $32.91 per VIP Service New Customers................................. ........ $831.18 per New Customer New Products............................................. $932.51 per New Product B) The estimated costs of doing business at the following cost driver volumes are computed using the cost driver rates computed above. Activity Level X Rate = Cost Meals Produced - 12,000 X $ 2.34 = $28,080 Deliveries - 1,100 X $ 9.36 = $10,296 VIP Services - 300 X $ 32.91 = $9,873 New Customers - 5 X $ 831.18 = $4,156 New Products - 2 X $ 932.51 = $1,865 Intercept = $12,414 Total Estimated Costs for the budget = $66,684 c) The company would save $10,296 per month by outsourcing the delivery service..