Question

Leslie Sporting Goods is a locally owned store that specializes in printing team jerseys. The majority of its business comes from orders for various local teams and organizations. While Leslie's prints everything from bowling team jerseys to fraternitylsorority apparel to special event shirts, summer league baseball and softball team jerseys are the company's biggest source of revenue A portion of Leslie's operating information for the company's last year follows: Number of Jerseys Printed 210 Month January February March April 22e Operating Cost $5,745 5,85e 8,645 9.750 9.250 6.210 6,125 5,90 4.800 6.015 June August September October November December Required: 3. Using the high-low method, calculate the store's total fixed operating costs and variable operating cost per jersey 4. Using the high-low method results, calculate the store's expected operating cost if it printed 475 jerseys 5. Perform a least squares regression analysis on Leslie's data 6. Using the regression output, create a linear equation (y a + bad for estimating Leslie's operating costs 7. Using the least squares regression results, calculate the store's expected operating cost if it prints 605 jerseys

Answer 1

3. HIGH LOW METHOD

Variable cost =( High cost-Low cost)/ (High Production- Low Production)

= (9750- 4800)/(690-195)

= 4950/495

= 10$ / Unit

Fixed cost = Total cost - Variable cost

Let's take low Production and cost for calculation of fixed cost

Fixed cost = 4800 - (10*195)

= 2850.

4.

Find the total cost of production for 475 Units.

Total cost = Fixed cost + Variable cost

= 2850 + (10*475)

= 2850 + 4750

= 7600

5.

M. Ivo 109 Units 110 111 cost 210 220 112 540 113 690 625 114 460 115 116 117 118 119 120 5745 5850 8645 9750 9250 62101 6125 5930 4800 6015 5960 4955 385 245 195 290 255 200 121 122 123 124 125 Variable cost fixed cost L 8.77 3448.06

Here Cost is Dependent variable and Unit produced is a Independent variable.

Formulas used :-

Variable cost =SLOPE(N110:N121,M110:M121)

Fixed cost =INTERCEPT(N110:N121,M110:M121)

6.

y = a + bx​​

Where a = Fixed cost

b = Variable cost per unit

y = Expected Operating cost

x = Units Produced

The regression equation will be as follows :-

y = 3448.06 +8.77x

7.

Expected Operating cost for 605 Units

y = 3448.06+ 8.77x

= 3448.06 + 8.77*(605)

= 3448.06 + 5305.85

= 8753.91 $

I hope my efforts will be fruitful to you...?