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 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 Material andling Department Costa $12,100 11,700 11.450 10,600 11,500 13.150 22.400 11.00 12,600 11.250 11,750 11.750 July September October November December 1.00 Problem 6-42 Part 1

Answer 1

Using regression tool in excel, the following results are derived

Intercept gives fixed component

X variable gives variable component

Part 1

Fixed component	$10152
Variable component	$0.84

Part 2

Total monthly cost = $10152 + $0.84 per unit of activity

Part 3

Total monthly cost = 10152 + (0.84+2450) = $12603