Business, 30.03.2021 19:10 mak92

Lexon Inc. is a large manufacturer of affordable DVD players. Management recently became aware of rising expenses resulting from returns of malfunctioning products. As a starting point for further analysis, Paige Jennings, the controller, wants to test different forecasting methods and then use the best one to forecast quarterly expenses for 2019. The relevant quarterly data for the previous three years follow: 2016 Quarter Return Expenses 2017 Quarter Return Expenses 2018 Quarter Return Expenses
1 $12,500 1 $12,900 1 $13,300
2 11,300 2 12,100 2 12,300
3 11,600 3 11,700 3 12,100
4 13,700 4 14,000 4 14,600

The result of a simple regression analysis using all 12 data points yielded an intercept of $11,854.55 and a coefficient for the independent variable of $126.22. . ( R -squared = 0.44, SE =$975).

Required:
a. Calculate the quarterly forecast for 2013 using the high-low method and regression analyses. Recommend which method Paige should use and explain why.
b. How does your analysis in requirement 1 change if Lexon manufactures its products in multiple global production facilities to serve the global market?

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