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REQUIRED: Using EXCEL, estimate the simple regression equation for (i) Dollar Value of Merchandise Purchased, (ii) Number of Purchase Orders and (iii) Number of Suppliers. а. b. From your results above, determine which is the most appropriate cost driver and explain your answer by referencing the appropriate statistical outputs.

REQUIRED: Using EXCEL, estimate the simple regression equation for (i) Dollar Value of Merchandise Purchased, (ii) Number of Purchase Orders and (iii) Number of Suppliers. а. b. From your results above, determine which is the most appropriate cost driver and explain your answer by referencing the appropriate statistical outputs.

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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How to solve (a) & (b)?

(a) will need to compute 3 simple linear regression equation.

(b) what to compare in the regression to derive the most appropriate cost driver?

Water Pursuits operates a chain of 10 retail surf and water sport apparel stores in Western Australia. Each store makes its own purchasing decisions. Vijay Krishnan, Chief Operating Officer of Water Pursuits, is interested in better understanding the drivers of the Purchasing Departments costs. For many years, the Purchasing Departments' costs have been allocated to products on the basis of the dollar value of merchandise purchased. Vijay recently attended a training seminar conducted by Retail Traders Association of WA and CPA Australia, titled "Cost Drivers in the Retail Industry". In a presentation at the seminar, Top Hat Clothiers, a high fashion retailer that has implemented activity-based costing, reported number of purchase orders and number of suppliers to be the two most important cost drivers of Purchasing Department costs. The dollar value of merchandise purchased in each purchase order was not found to be a significant cost driver. Enthralled, Vijay interviewed several members of the Purchasing Department at the Water Pursuits store in Fremantle. They believed that Top Hat's conclusions also applied to their Purchasing Department. Vijay collected the following data for the most recent year for Water Pursuits' 10 retail stores: Purchasing Department Costs Dollar Value of Number of Number Department Store merchandise purchase orders of purchased $ suppliers 132 $ 1,523,000 $ 1,100,000 $ 298,315,000 173,456,000 81,160,000 4,457 4,550 2,333 5,944 Albany Margaret River 122 Mandurah 547,000 68 $ 2,049,000 $ 1,056,000 2$ Fremantle $ 219,566,000 $ 255 163,505,000 129,854,000 352,875,000 $ Esperance 4,196 113 529,000 $ 1,538,000 $ 1,754,000 $ 1,612,000 $ 1,257,000 Broome 65 2,127 5,286 4,081 4,707 4,331 Mindarie 104 Jurien Bay 238,674,000 $ 195 239,312,000 $ Geraldton 144 Exmouth 180,944,000 133 REQUIRED: Using EXCEL, estimate the simple regression equation for (i) Dollar Value of Merchandise Purchased, (ii) Number of Purchase Orders and (iii) Number of Suppliers. а. b. From your results and explain your answer by referencing the appropriate statistical outputs. determine which is the most appropriate cost driver
Transcribed Image Text:Water Pursuits operates a chain of 10 retail surf and water sport apparel stores in Western Australia. Each store makes its own purchasing decisions. Vijay Krishnan, Chief Operating Officer of Water Pursuits, is interested in better understanding the drivers of the Purchasing Departments costs. For many years, the Purchasing Departments' costs have been allocated to products on the basis of the dollar value of merchandise purchased. Vijay recently attended a training seminar conducted by Retail Traders Association of WA and CPA Australia, titled "Cost Drivers in the Retail Industry". In a presentation at the seminar, Top Hat Clothiers, a high fashion retailer that has implemented activity-based costing, reported number of purchase orders and number of suppliers to be the two most important cost drivers of Purchasing Department costs. The dollar value of merchandise purchased in each purchase order was not found to be a significant cost driver. Enthralled, Vijay interviewed several members of the Purchasing Department at the Water Pursuits store in Fremantle. They believed that Top Hat's conclusions also applied to their Purchasing Department. Vijay collected the following data for the most recent year for Water Pursuits' 10 retail stores: Purchasing Department Costs Dollar Value of Number of Number Department Store merchandise purchase orders of purchased $ suppliers 132 $ 1,523,000 $ 1,100,000 $ 298,315,000 173,456,000 81,160,000 4,457 4,550 2,333 5,944 Albany Margaret River 122 Mandurah 547,000 68 $ 2,049,000 $ 1,056,000 2$ Fremantle $ 219,566,000 $ 255 163,505,000 129,854,000 352,875,000 $ Esperance 4,196 113 529,000 $ 1,538,000 $ 1,754,000 $ 1,612,000 $ 1,257,000 Broome 65 2,127 5,286 4,081 4,707 4,331 Mindarie 104 Jurien Bay 238,674,000 $ 195 239,312,000 $ Geraldton 144 Exmouth 180,944,000 133 REQUIRED: Using EXCEL, estimate the simple regression equation for (i) Dollar Value of Merchandise Purchased, (ii) Number of Purchase Orders and (iii) Number of Suppliers. а. b. From your results and explain your answer by referencing the appropriate statistical outputs. determine which is the most appropriate cost driver
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