Caiman Distribution Partners is the Brazilian distribution company of a U.S. consumer products firm. Inflation in Brazil has made bidding and budgeting difficult for marketing managers trying to penetrate some of the country's rural regions. The company expects to distribute 460,000 cases of products in Brazil next month. The controller has classified operating costs (excluding costs of the distributed product) as follows. Account Operating Cost Behavior Supplies $ 1,500,000 All variable Supervision 207,000 $ 153,000 Fixed Truck expense 1,240,000 $ 180,000 Fixed Building leases 873,000 $ 562,000 Fixed Utilities 219,000 $ 141,000 Fixed Warehouse labor 873,000 $ 122,000 Fixed Equipment leases 775,000 $ 620,000 Fixed Data processing equipment 960,000 All fixed Other 861,000 $ 360,000 Fixed Total $ 7,508,000
Caiman Distribution Partners is the Brazilian distribution company of a U.S. consumer products firm. Inflation in Brazil has made bidding and budgeting difficult for marketing managers trying to penetrate some of the country's rural regions. The company expects to distribute 460,000 cases of products in Brazil next month. The controller has classified operating costs (excluding costs of the distributed product) as follows.
| Account | Operating Cost | Behavior | ||||
| Supplies | $ | 1,500,000 | All variable | |||
| Supervision | 207,000 | $ | 153,000 | Fixed | ||
| Truck expense | 1,240,000 | $ | 180,000 | Fixed | ||
| Building leases | 873,000 | $ | 562,000 | Fixed | ||
| Utilities | 219,000 | $ | 141,000 | Fixed | ||
| Warehouse labor | 873,000 | $ | 122,000 | Fixed | ||
| Equipment leases | 775,000 | $ | 620,000 | Fixed | ||
| Data processing equipment | 960,000 | All fixed | ||||
| Other | 861,000 | $ | 360,000 | Fixed | ||
| Total | $ | 7,508,000 | ||||
Although overhead costs were related to revenues throughout the company, the experience in Brazil suggested to the managers that they should incorporate information from a published index of Brazilian prices in the distribution sector to forecast overhead in a manner more likely to capture the economics of the business.
Following instructions from the corporate offices, the controller's office in Brazil collected the following information for monthly operations from last year.
| Month | Cases | Price Index | Operating Costs | |
| 1 | 231,000 | 125 | $5,699,167 | |
| 2 | 354,000 | 121 | 5,806,666 | |
| 3 | 232,000 | 122 | 5,849,933 | |
| 4 | 425,000 | 124 | 5,927,645 | |
| 5 | 349,000 | 126 | 5,939,163 | |
| 6 | 350,000 | 118 | 6,043,392 | |
| 7 | 409,000 | 129 | 5,918,523 | |
| 8 | 452,000 | 136 | 6,133,896 | |
| 9 | 368,000 | 130 | 6,126,158 | |
| 10 | 425,000 | 136 | 6,186,653 | |
| 11 | 413,000 | 127 | 6,208,827 | |
| 12 | 453,000 | 130 | 6,362,283 | |
These data are considered representative for both past and future operations in Brazil.
rev: 10_16_2019_QC_CS-186472, 10_13_2020_QC_CS-234647, 10_13_20
Using Excel, calculate the simple regression of operating costs on cases shipped and enter the regression coefficients. (Round "Intercept" to nearest whole dollar amount. Round the case coefficient to 5 decimal places.)
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Compute the estimation of operating costs assuming that 450,000 cases will be shipped next month by using the results of a simple regression of operating costs on cases shipped. (Round variable costs per unit to 5 decimal places. Round the intercept and final answer to the nearest whole dollar amount.)
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