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 115 109 102 January February March April May June July August September Janitorial Labor Cost $3,840 $3,648 $4,128 $3,456 $4,320 $4,032 $2,784 $2,688 $3,840 69 108

Answer 1

(a)

Scatterplot using Janitorial Labour cost and Number of Units Produced $4,320.00 5000 4500 4000 $4,128.00 $4,032.00 $3,840.00 $3,840.00 $3,648.00 $3,456.00 $2,784.00 $2,688.00 Janitorial Labour Cost 115 109 102 76 69 108 77 71127 1 2 3 7 8 9 10 5 6 Number of Units Produced Number of units produced Janitorial Labour Cost

(b)

Scatterplot using the Janitorial labour cost and number of Janitorial workdays 5000 $4,320.00 4500 $4,128.00 $4,032.00 4000 $3,840.00 $3,840.00 $3,648.00 $3,456.00 $2,784.00 $2,688.00 Janitorlal Labour Cost 20 23 22 16 14 21 1 9 10 5 6 Number of Janitorial Workdays Number of Janitorial Workdays Janitorial Labour Cost

(c)

Janitorial Workdays-should be used as the activity base for explaining labor cost because direct labour hours are the cost drivers in most of the manufacturing concerns, if the labor cost per labor increases it wil increase the cost company producing al company products/services.