Question

Required information Problem 6-42 Continuation of Preceding Problem; Computing Least-Squares Regression Estimates: Comparing Multiple Methods (Appendix) (LO 6-1, 6-2, 6-5, 6-6, 6-9) [The following information applies to the questions displayed below) Martha's Vineyard Marine Supply is a wholesaler for a large variety of boating and fishing equipment. The company's controller, Mathew Knight, has recently completed a cost study of the firm's material handling department in which he used work measurement to quantify the department's activity. The control factor unit used in the work-measurement study was hundreds of pounds of equipment unloaded or loaded at the company's loading dock Knight compiled the following data Month January February March April May June July August September October November December Units of activity (hundreds of pounds of equipment loaded or unloaded) 2,200 2,000 1,700 1,400 2.600 2,800 2,400 2.200 3.000 1.500 1.600 Material Handling Department Costs $12, 100 11,700 11, 450 10,600 11,500 13,150 12,400 11, 12,600 11,250 11.750 < Prev 5 6 7 of 16 Next >

Answer 1

Answer Computation of Variable and fixed cost using Regression method From above S.no Σχy 12 301390000 25200 142050 55940000 635040000 Sy Ex^2 (Ex)^2 Month 1 Jan 2 Feb 3 Mar 4 Apr 5 May 6 Jun 7 July 8 Aug 9 Sep 10 Oct 11 Nov 12 Dec Total Units (X) Cost (Y) (X)*(X) 2200 $ 12,100 48,40,000 2000 $ 11,700 40,00,000 1700 $ 11,450 28,90,000 1400 $ 10,600 19,60,000 2600 $ 11,500 67,60,000 2800 $ 13,150 78,40,000 2400 $ 12,400 57,60,000 2200 $ 11,800 48,40,000 3000 $ 12,600 90,00,000 1500 $ 11,250 22,50,000 1600 $ 11,750 25,60,000 1800 $ 11,750 32,40,000 25200 $ 1,42,050 5,59,40,000 (x)*(Y) 2,66,20,000 2,34,00,000 1,94,65,000 1,48,40,000 2,99,00,000 3,68,20,000 2,97,60,000 2,59,60,000 3,78,00,000 1,68,75,000 1,88,00,000 2,11,50,000 30,13,90,000 Variable cost = (12*301390000)-(25200*142050)/(12*55940000)-(635040000) Variable cost(b) 1.02 Fixed cost =( 142050- (1.02*25200)/12 Fixed cost (a) 9,696 therefore variable cost = 1.02 per unit Fixed cost = 9695.5 Variable cost formula (b) = (nEXY-EX*ZY) nEX^2-(2x)^2 Cost function Y = a+bX Y = 9696 + 1.02x Fixed cost (a) = (Zy-b2x)/n