Chapter 10 Problems - clean version

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Feb 20, 2024

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Month January February March April May June July August September Estimated monthly purchases for this part ba Month October November December Required Highest observation of cost driver Lowest observation of cost driver 10-26 High-Low, Regression. May Blackw estimate future monthly purchase costs for p months as follows: 1. The computer in May's office is down, and #696. May grabs a calculator and uses the h
Difference May equation is 1.041 + (4 x quantity purcha 2. Using the equation from requirement 1, ca October November December 3. After a few hours May's computer is fixed. quantity purchased and purchase costs of pa Evaluate the regression line using the criteria the regression equation to the equation base
4. Use the regression results to calculate the costs to the expected purchase costs calcula
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Cost of PurchaseQuantity Purchased 12,675 2,710 13,000 2,810 17,653 4,153 15,825 3,756 13,125 2,912 13,814 3,387 15,300 3,622 10,233 2,298 14,950 3,562 ased on expected demand of the two products for th Purchase Quantity Expected 3,340 parts 3,710 3,040 Cost 4153 17653 2298 10233 well is the new manager of the materials storeroom f part #696, used in two of Clayton's products. May h d May has been asked to immediately provide an equ high-low method to estimate a cost equation. Wha Cost driver: Quanitity purchased
1855 7420 B = 4 ased) alculate the future expected purchase costs for each 13,361.04 14,841.04 12,161.04 y = $2,582.6 + 3.54X . May uses the first 9 months of data and regression art #696. The regression line May obtains is as follow a of economic plausibility , goodness of fit , and ed on the high-low method. Which is a better fit ?
e expected purchase costs for October, November, a ated using the high-low method in requirement 2. C
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parts he rest of the year are as follows: for Clayton Manufacturing. May has been asked to has purchase cost and quantity data for the past 9 uation to estimate the future purchase cost for part at equation does she get?
h of the last 3 months of the year n analysis to estimate the relationship between the ws: significance of the independent variable . Compare Why?
and December. Compare the expected purchase Comment on your results.
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Highest observation of cost driver Lowest observation of cost driver Difference May equation is 1.041 + (4 x quantity purchased)
Cost driver: Quanitity purchased 4,153 2,298 1,855 B = 4
Cost 17,653 10,233 7,420 Activity Cost MIN MAX Delta MIN ### ### ### ###
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MAX Delta B Y X ### ### 4
Month January 942 974 1,710 February 1,008 776 2,655 March 1,218 686 2,705 April 1,380 694 4,220 May 1,484 588 4,660 June 1,548 422 4,455 July 1,568 352 4,435 August 1,972 420 4,990 September 1,190 564 2,990 October 1,302 788 2,610 November 962 762 2,240 December 772 1,028 1,490 Required 1. Conduct a regression using the monthly data of ope Regression: Operating Costs = a + (b × Number of fre Variable Coefficient Constant 445.76 Independent variable: No. of freight miles 0.26 10-28 Interpreting regression results. Spirit Freigh provinces of Canada. Reese Brown, a financial analyst for budgeting purposes. Transportation costs at Spirit a maintenance costs (primarily overhaul of vehicles). Brown gathers monthly data on each type of cost, as w The data collected are shown below (all in thousands): Operating Costs Maintenanc e Costs Freight Miles
r squared = 0.86; Durbin-Watson statistic = 2.18 Regression: Maintenance Costs = a + (b × Number of Variable Coefficient Constant 1170.57 Independent variable: No. of freight miles -0.15 r squared = 0.77; Durbin-Watson statistic = 1.94 January 1,386.60 February March April May June July August September October November December 6. Provide a reasoned explanation for the observed sig alternative data or alternative regression specification
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erating costs on freigh eight miles) Std. Error t-Value 112.97 3.95 0.03 7.83 htways is a leader in t at Spirit Freightways, are of two types: (a) o well as the total freigh :
freight miles) Std. Error t-Value 91.07 12.85 0.03 -5.83 gn on the cost driver v ns would you like to us
ht miles. You should obtain the following result: transporting agricultural products in the western , is studying the behaviour of transportation costs operating costs (such as labour and fuel) and (b) ht miles traveled by Spirit vehicles in each month.
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variable in the maintenance cost regression. What se to better capture the above relationship?
Variable Cost Rework cost per hour 79 Repair costs Customer support cost per hour 35 Transportation cost per load 350 Warranty repair cost per hour 89 Required 1. Should SpeedPrint change to the new compone 3. What other factors should managers at SpeedP Q1 10-33 Quality improvement, relevant costs, technology printing presses each year. The varia SpeedPrint's current presses have a quality probl suggest changing a key component in each pres year, however, SpeedPrint expects that with the (1) save 14,000 hours of rework, (2) save 850 hours of customer support, (3) move 225 fewer loads, (4) save 8,000 hours of warranty repairs, and (5) sell an additional 140 printing presses, for a t SpeedPrint believes that even as it improves qua SpeedPrint uses a 1-year time horizon for this de 2. Suppose the estimate of 140 additional printin printing presses that SpeedPrint needs to sell to j
Variable Rework savings 1,106,000 Customer support savings 29,750 Loads savings 78,750 Warranty savings 712,000 Addiitonal revenue 1,680,000 Total gain Cost of new component Net savings Q2
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Fixed Cost Total Cost 115 194 55 90 115 465 150 239 ent? Show your calculation Print consider when makin , relevant revenues. Spe able and fixed costs of rew lem that causes variations ss . The new component w new component it will total contribution margin o ality, it will not be able to s ecision because it plans to ng presses sold is uncertain justify adopting the new c
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Total 1,106,000 29,750 78,750 712,000 1,926,500 1,680,000 3,606,500 1,260,000 2,346,500
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ns ng their decision about changing to a new component? eedPrint manufactures and sales 18,000 high- work and repair are as follows: s in the shade of some colours. Its engineers will cost $70 more than the old one. In the next of $1,680,000. save any of the fixed costs of rework or repair. introduce a new press at the end of the year. n. What is the minimum number of additional component?
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?
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