Method of Least Squares, Developing and Using the Cost Formula The method of least squares was...
Method of Least Squares, Developing and Using the Cost Formula
The method of least squares was used to develop a cost equation to predict the cost of receiving purchased parts at a video game manufacturer. Ninety-six data points from monthly data were used for the regression. The following computer output was received:
| Intercept | 205,400 |
| Slope | 405 |
The cost driver used was number of parts inspected.
Required:
1. What is the cost formula?
Total cost of receiving = $ + ( $ × Number of parts inspected )
2. Using the cost formula from Requirement 1, identify each of the following: independent variable, dependent variable, Variable rate per professional hour, and fixed cost per month.
| Independent variable | Number of parts inspected | |
| Dependent variable | Total cost of receiving | |
| Variable rate per professional hour | $405 | per part inspected |
| Fixed cost per month | $205,400 |
3. Using the cost formula, predict the cost of receiving for a month in which 7,200 parts are inspected.
Total cost of receiving = $
Homework Answers
Answers
- Requirement 1
Total cost of receiving = $ 205,400 + ( $ 405 × Number of parts inspected )
- Requirement 2: Already Complete
- Requirement 3
Total cost of receiving = $ 205,400 + ( $ 405 × Number of parts inspected )
= 205400 + (405 x 7200)
= 205400 + 2916000
= $ 3,121,400 = Answer
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Method of Least Squares, Developing and Using the Cost
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Method of Least Squares, Developing and Using the Cost Formula The method of least squares was used to develop a cost equation to predict the cost of receiving purchased parts at a video game manufacturer. Ninety-six data points from monthly data were used for the regression. The following computer output was received: Intercept 183,800 Slope 295 The cost driver used was number of parts inspected. Required: 1. What is the cost formula? Total cost of receiving =...
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Jungemann Company, which uses the high-low method to analyze
cost behavior, has determined that machine hours best predict the
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hour usage data for the first six months of the year
follow:
Jungemann Company, which uses the high-low method to analyze cost behavior, has determined that machine hours best predict the company's total utilities cost. The company's cost and machine hour usage data for the first six months of the year follow:...
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Method of Least Squares, Developing and Using the Cost Formula The method of least squares was used to develop a cost equation to predict the cost of receiving purchased parts at a video game manufacturer. Ninety-six data points from monthly data were used for the regression. The following computer output was received: Intercept 183,800 Slope 295 The cost driver used was number of parts inspected. Required: 1. What is the cost formula? Total cost of receiving =...
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Which of the following concepts used in estimating cost behaviour is unique to the least-squares regression method? A) Independent variable. B) Dependent variable. C) R-squared. D) Variable cost per unit.
Mand a mentelectoramento The method of a squares was to develop a contation to predict the cost of datapos from many data for them . The was 19.900 Intercept Slove The cost e 320 mbert Reged 1. What is the cost formula? Tal costos 2. Using the cost formula from hout, and the cost per month t h e det Dependent variable All work wave
The method of least squares Select one: a. analyzes a cost relationship by plotting the data points on a graph. is the least accurate method. C. can easily be calculated by hand. uses the results of regression analysis to construct a cost formula. Figure 3-2 Lassiter Toys, Inc. Cost of Materials $20,000 00,000 200,000 300,000 40,000 60,000 Refer to Figure 3-2. The cost behavior of the materials cost is Select one: a. variable b. discretionary C. committed d. fixed Managerial...
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Coughlin Company, which uses the high-low method to analyze cost behavior, has determined that machine hours best predict the company's total utilities cost. The company's cost and machine hour usage data for the first six months of the year follow: (Click the icon to view the data.) Requirements Using the high-low method, answer the following questions 1. What is the variable utilities cost per machine hour? 2. What is the fixed cost of utilities each month? 3. If Coughlin Company...
Method of Least Squares, Goodness of Fit Deepa Dalal opened a free-standing radiology clinic. She had anticipated that the costs for the radiological tests would be primarily fixed, but she found that costs increased with the number of tests performed. Costs for this service over the past nine months are as follows: Month January February March April May Radiology Tests 2,800 2,600 3,100 3,500 3,400 3,700 3,840 4,100 3,450 Total Cost $133,500 135,060 175,000 170,600 176,900 186,600 174,450 195,510 185,300...
Jungemann Company, which uses the high-low method to analyze
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company's total utilities cost. The company's cost and machine
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Jungemann Company, which uses the high-low method to analyze cost behavior, has determined that machine hours best predict the company's total utilities cost. The company's cost and machine hour usage data for the first six months of the year follow:...
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