Question

Question 1 - Selection of an activity base Fantastic Sweepers of New England manufactures replacement rotary sweeper brooms for large sweeper trucks that clear leaves and snow from city streets. The business is highly seasonal, with the largest demand during and just preceding the fall and winter months. Because there are so many different kinds of sweeper brooms used by its customers, Fantastic Sweepers makes all of its brooms to order. The company has been analyzing its overhead accounts to determine the fixed and variable components for planning purposes. Below are data for the company's Janitorial labor costs over the last nine months. Number of Units Produced Number of Janitorial Workdays 109 January February March April May June July August September ña Nota Janitorial Labor Cost $3,840 $3,648 $4.128 $3,456 $4,320 $4,032 $2,784 $2,688 $3,840 77 127
please solve neat and clean handwriting.

Answer 1

	Q1	Arrange Units Produced in Ascending Order
		Units Produced	Work days	Labor Cost
		69	23	$4,320
		71	14	$2,688
		76	20	$3,456
		77	16	$2,784
		102	23	$4,128
		108	22	$4,032
		109	19	$3,648
		115	21	$3,840
		127	21	$3,840
		From the Scatter diagram , it is clear that Labor Cost is correlated with Work days.
		Janitorial Workdays should be used as activity base
	Q2	X	Y
		X Ray Taken	X Ray Cost
		3000	$17,000
		3750	$18,000
		4250	$20,000
		4500	$22,000
		5000	$23,000
		5500	$24,000
		5750	$26,000
		6250	$28,000
		7000	$27,500
		High Low Method
			X	Y
			X ray taken	X ray Cost
		High	7000	$27,500
		Low	3000	$17,000
		Y=a+bX
		27500=a+b*7000	….Equation(1)
		17000=a+b*3000	….Equation(2)
		Subtraction Equation(2) from Equation(1)
		b*4000=	$10,500
		b=10500/4000	2.6250
		17000=a+b*3000
		17000=a+2.6250*3000
		a=17000-(2.6250*3000)=	$9,125
		COST EQUATION:
		X-Ray Cost =$9125+2.63*(X ray taken)
		Y=$9125+2.63*X
	(b)	X ray taken X=	4600
		Y=$9125+2.6250*X=	$21,200.00
		X ray Cost =	$21,200.00
		Click "Data"
		Click "Data Analysis"
		Select "Regression" tool
		Click"OK"
		Input y_Range (X-Ray Costs)
		Input x_Range (X ray taken)
		Click "OK"
		Refer To Summary Output
		Intercept	7539.22
		X Variable	3.06
		Cost Equation:
		Y=7539.22+3.06X
								UNITS PRODUCED VS LABOR COST;X-axis-Units Y-Axis-Cost $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 20 40 60 100 120 140 WORKDAYS VS LABOR COST:X axis: Workdays, Y axis-Labor Cost $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 10 1 SUMMARY OUTPUT 3 Regression Statistics 4 Multiple F 0.973026 5 R Square 0.946779 6 Adjustedi 0.939176 7 Standard I 978.7662 8 Observati 9 10 ANOVA df 12 Regressio 13 Residual 14 Total SS MS F gnificance F 1 1.19E+08 1.19E+08 124.5263 1.03E-05 7 6705882 957983.2 81.26E+08 15 Coefficientsandard Errt Stat P-value Lower 95%Upper 95%ower 95.09 pper 95.0% 17 Intercept 7539.216 1408.844 5.351349 0.001063 4207.829 10870.6 4207.829 10870.6 18 x Variable 3.058824 0.274109 11.15914 1.03E-05 2.410658 3.706989 2.410658 3.706989 19 Number of X ray taken Vs Actual Cost and Cost as per Equation $35,000 $30,000 $25,000 $20,000 9515,000 $10,000 $5,000 1000 2000 6000 7000 8000 3000 4000 5000 --X Ray Cost(Actual) Cost as per Equation $24,000 $22,3091 JOU Y1 Cost as X Ray per X Ray Taken Cost(Actual) Equation Y=7539.22+3.06X 3000 $17,000 $16,719 3750 $18,000 $19,014 4250 $20,000 $20,544 4500 $22,000 $21,309 5000 $23,000 $22,839 5500 $24,000 $24,369 5750 $26,000 $25,134 6250 $28,000 $26,664 7000 $27,500 $28,959 This Cost is more accurate than high low method, because all the readings are taken into consideration In High and Low method only two readings are considered to arrive at the equation