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PART B The Palmer School of Business operates a transportation service, solely for the purpose of providing commuting services to off-campus students. You have been hired as accounting students to analyze the cost of providing the transportation services and to develop a cost function which describes the behaviour of the related costs. The schools' administration has assembled the data for a twelve-month period pertaining to the monthly total costs of providing the service and the corresponding number of students who used the transportation system each month. You were recently taught how to use the Excel graphing tool, and a member of the team successfully generated the scattergram given below from the data set provided. Total Transportation Costs PALMER SCHOOL OF BUSINESS SCATTER DIAGRAM 300,000 Line of Best Fit 250,000 200,000 150,000 100,000 50,000 0 500 1,000 1,500 # of Students 2,000 2,500 3,000 The other team members are now tasked to use the graph to provide the administrators with a detailed response to the following questions: i) What is another name for the "line of best fit"? What is the purpose of this line? (2 mark) ii) Using the "line of best fit”, determine Palmer School of Business' fixed cost per month and the variable cost per student. (Use 0 & 2,500 students.) iii) Based on the scatter gram, what is the equation of the total mixed cost function? (3% marks) (1 mark) iv) In September of the upcoming academic year, the university expects the number of students using the services to increase to 3,400. Determine the expected total transportation costs? (1½ marks

PART B The Palmer School of Business operates a transportation service, solely for the purpose of providing commuting services to off-campus students. You have been hired as accounting students to analyze the cost of providing the transportation services and to develop a cost function which describes the behaviour of the related costs. The schools' administration has assembled the data for a twelve-month period pertaining to the monthly total costs of providing the service and the corresponding number of students who used the transportation system each month. You were recently taught how to use the Excel graphing tool, and a member of the team successfully generated the scattergram given below from the data set provided. Total Transportation Costs PALMER SCHOOL OF BUSINESS SCATTER DIAGRAM 300,000 Line of Best Fit 250,000 200,000 150,000 100,000 50,000 0 500 1,000 1,500 # of Students 2,000 2,500 3,000 The other team members are now tasked to use the graph to provide the administrators with a detailed response to the following questions: i) What is another name for the "line of best fit"? What is the purpose of this line? (2 mark) ii) Using the "line of best fit”, determine Palmer School of Business' fixed cost per month and the variable cost per student. (Use 0 & 2,500 students.) iii) Based on the scatter gram, what is the equation of the total mixed cost function? (3% marks) (1 mark) iv) In September of the upcoming academic year, the university expects the number of students using the services to increase to 3,400. Determine the expected total transportation costs? (1½ marks

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...
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PART B The Palmer School of Business operates a transportation service, solely for the purpose of providing commuting services to off-campus students. You have been hired as accounting students to analyze the cost of providing the transportation services and to develop a cost function which describes the behaviour of the related costs. The schools' administration has assembled the data for a twelve-month period pertaining to the monthly total costs of providing the service and the corresponding number of students who used the transportation system each month. You were recently taught how to use the Excel graphing tool, and a member of the team successfully generated the scattergram given below from the data set provided. Total Transportation Costs PALMER SCHOOL OF BUSINESS SCATTER DIAGRAM 300,000 Line of Best Fit 250,000 200,000 150,000 100,000 50,000 0 500 1,000 1,500 # of Students 2,000 2,500 3,000 The other team members are now tasked to use the graph to provide the administrators with a detailed response to the following questions: i) What is another name for the "line of best fit"? What is the purpose of this line? (2 mark) ii) Using the "line of best fit”, determine Palmer School of Business' fixed cost per month and the variable cost per student. (Use 0 & 2,500 students.) iii) Based on the scatter gram, what is the equation of the total mixed cost function? (3% marks) (1 mark) iv) In September of the upcoming academic year, the university expects the number of students using the services to increase to 3,400. Determine the expected total transportation costs? (1½ marks
Transcribed Image Text:PART B The Palmer School of Business operates a transportation service, solely for the purpose of providing commuting services to off-campus students. You have been hired as accounting students to analyze the cost of providing the transportation services and to develop a cost function which describes the behaviour of the related costs. The schools' administration has assembled the data for a twelve-month period pertaining to the monthly total costs of providing the service and the corresponding number of students who used the transportation system each month. You were recently taught how to use the Excel graphing tool, and a member of the team successfully generated the scattergram given below from the data set provided. Total Transportation Costs PALMER SCHOOL OF BUSINESS SCATTER DIAGRAM 300,000 Line of Best Fit 250,000 200,000 150,000 100,000 50,000 0 500 1,000 1,500 # of Students 2,000 2,500 3,000 The other team members are now tasked to use the graph to provide the administrators with a detailed response to the following questions: i) What is another name for the "line of best fit"? What is the purpose of this line? (2 mark) ii) Using the "line of best fit”, determine Palmer School of Business' fixed cost per month and the variable cost per student. (Use 0 & 2,500 students.) iii) Based on the scatter gram, what is the equation of the total mixed cost function? (3% marks) (1 mark) iv) In September of the upcoming academic year, the university expects the number of students using the services to increase to 3,400. Determine the expected total transportation costs? (1½ marks
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