Garcia Corporation manufactures a drink bottle, model CL24. During 2020, Garcia produced 190,000 bottles at a total cost of $674,500. Beecher Corporation has offered to supply as many bottlesas Garcia wants at a cost of $3.45 per bottle. Garcia anticipates needing 205,000 bottles each year for the next few years.Read the requirements.Requirement 1a. What is the average cost of manufacturing a drink bottle in 2020? How does it compare to Beecher's offer?The average cost ofper bottle isthan Beacher's offerRequirement 1b. Can Garcia use the answer in requirement 1a to determine the cost of manufacturing 205,000 drink bottles? Explain.take the average manufacturing cost in 2020 to determine the total cost of manufacturing 205,000 drink bottles. The reason is thatGarciaRequirement 2. Garcia's cost analyst uses annual data from past years to estimate the following regression equation with total manufacturing costs of the drink bottle as the dependent variable anddrink bottles produced as the independent variable: y=$438,000 $2.00x. During the years used to estimate the regression equation, the production of drink bottles varied from 178,000 to 215,000Using this equation, estimate how much it would cost Garcia to manufacture 205,000 drink bottles. How much more or less costly is it to manufacture the bottles rather than to acquire them fromBeecher?Estimate how much it would cost Garcia to manufacture 205,000 drink bottles, then calculate the cost to purchase the bottles.Estimated cost to make the bottlesCost to purchase the bottlesto purchase the bottles rather than manufacture them in-houseRequirement 3. What other information would you need to be confident that the equation in requirement 2t2 accurately predicts the cost of manufacturing drink bottles? (Select all that apply)A Can Garcia's competitors manufacture drink bottles at a cost less than Garcia?B Does the slope of the regression line indicate that a strong relationship exists between manufacturing costs and the number of drink bottles produced?it will costC. Is the relationship between total manufacturing costs and quantity of drink bottles economically plausible?D. How good is the goodness of fit? That is, how well does the estimated line fit the data?

Cost of production is the amount that a firm is required to incur in producing the required number…

Garcia Corporation manufactures a drink bottle, model CL24. During 2020, Garcia produced 190,000 bottles at a total cost of $674,500. Beecher Corporation has offered to supply as many bottles as Garcia wants at a cost of $3.45 per bottle. Garcia anticipates needing 205,000 bottles each year for the next few years. Read the requirements.

Garcia Corporation manufactures a drink bottle, model CL24. During 2020, Garcia produced 190,000 bottles at a total cost of $674,500. Beecher Corporation has offered to supply as many bottles as Garcia wants at a cost of $3.45 per bottle. Garcia anticipates needing 205,000 bottles each year for the next few years. Read the requirements.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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