Requirement 1. The computer in May's office is down, and May has been asked to immediately provide an equation to estimate the future purcha cost equation. What equation does she get? Purchase costs (y) = $ 1,041 + ( 4 X Quantity purchased (X) ) Requirement 2. Using the equation from requirement 1, calculate the future expected purchase costs for each of the last 3 months of the year. Month October Purchase Quantity Expected 3,340 parts November 3,710 parts December 3,040 parts High-Low Method Expected Cost E S 14,401 $ 15,881 13,201 Requirement 3. After a few hours May's computer is fixed. May uses the first 9 months of data and regression analysis to estimate the relationshi May obtains is as follows: y = $2,582.6+ 3.54 Run a regression on the 9 months of data u Regression Statistics R Square t Stat X Variable 1 Requirements 3. After a few hours May's computer is fixed. May uses the first 9 months of data and regression analysis to estimate the relationship between the quantity purchased and purchase costs of part #696. The regression line May obtains is as follows: y= $2,582.6+ 3.54X Evaluate the regression line using the criteria of economic plausibility, goodness of fit, and significance of the independent variable. Compare the regression equation to the equation based on the high-low method. Which is a better fit? Why? 4. Use the regression results to calculate the expected purchase costs for October, November, and December. Compare the expected purchase costs to the expected purchase costs calculated using the high-low method in requirement 2. Comment on your results. Month Cost of Purchase Quantity Purchased January February $ 12,675 2,710 parts 13,000 2,810 March 17,653 4,153 April 15,825 3,756 May 13,125 2,912 June 13,814 3,387 July 15,300 3,622 August 10,233 2,298 September 14,950 3,562 - ☑ Print Done Month October Purchase Quantity Expected 3,340 parts November 3,710 December 3,040
Requirement 1. The computer in May's office is down, and May has been asked to immediately provide an equation to estimate the future purcha cost equation. What equation does she get? Purchase costs (y) = $ 1,041 + ( 4 X Quantity purchased (X) ) Requirement 2. Using the equation from requirement 1, calculate the future expected purchase costs for each of the last 3 months of the year. Month October Purchase Quantity Expected 3,340 parts November 3,710 parts December 3,040 parts High-Low Method Expected Cost E S 14,401 $ 15,881 13,201 Requirement 3. After a few hours May's computer is fixed. May uses the first 9 months of data and regression analysis to estimate the relationshi May obtains is as follows: y = $2,582.6+ 3.54 Run a regression on the 9 months of data u Regression Statistics R Square t Stat X Variable 1 Requirements 3. After a few hours May's computer is fixed. May uses the first 9 months of data and regression analysis to estimate the relationship between the quantity purchased and purchase costs of part #696. The regression line May obtains is as follows: y= $2,582.6+ 3.54X Evaluate the regression line using the criteria of economic plausibility, goodness of fit, and significance of the independent variable. Compare the regression equation to the equation based on the high-low method. Which is a better fit? Why? 4. Use the regression results to calculate the expected purchase costs for October, November, and December. Compare the expected purchase costs to the expected purchase costs calculated using the high-low method in requirement 2. Comment on your results. Month Cost of Purchase Quantity Purchased January February $ 12,675 2,710 parts 13,000 2,810 March 17,653 4,153 April 15,825 3,756 May 13,125 2,912 June 13,814 3,387 July 15,300 3,622 August 10,233 2,298 September 14,950 3,562 - ☑ Print Done Month October Purchase Quantity Expected 3,340 parts November 3,710 December 3,040
Chapter4A: Nopat Breakeven: Revenues Needed To Cover Total Operating Costs
Section: Chapter Questions
Problem 1EP
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Question
Transcribed Image Text:Requirement 1. The computer in May's office is down, and May has been asked to immediately provide an equation to estimate the future purcha
cost equation. What equation does she get?
Purchase costs (y)
=
$
1,041
+ (
4
X
Quantity purchased (X)
)
Requirement 2. Using the equation from requirement 1, calculate the future expected purchase costs for each of the last 3 months of the year.
Month
October
Purchase Quantity Expected
3,340 parts
November
3,710 parts
December
3,040 parts
High-Low Method
Expected Cost
E
S
14,401
$
15,881
13,201
Requirement 3. After a few hours May's computer is fixed. May uses the first 9 months of data and regression analysis to estimate the relationshi
May obtains is as follows: y = $2,582.6+ 3.54
Run a regression on the 9 months of data u
Regression Statistics
R Square
t Stat
X Variable 1
Requirements
3. After a few hours May's computer is fixed. May uses the first 9 months of data and regression
analysis to estimate the relationship between the quantity purchased and purchase costs of
part #696. The regression line May obtains is as follows:
y= $2,582.6+ 3.54X
Evaluate the regression line using the criteria of economic plausibility, goodness of fit, and
significance of the independent variable. Compare the regression equation to the equation based
on the high-low method. Which is a better fit? Why?
4. Use the regression results to calculate the expected purchase costs for October, November, and
December. Compare the expected purchase costs to the expected purchase costs calculated using
the high-low method in requirement 2. Comment on your results.
Month
Cost of Purchase
Quantity Purchased
January
February
$
12,675
2,710 parts
13,000
2,810
March
17,653
4,153
April
15,825
3,756
May
13,125
2,912
June
13,814
3,387
July
15,300
3,622
August
10,233
2,298
September
14,950
3,562
-
☑
Print
Done
Month
October
Purchase Quantity
Expected
3,340 parts
November
3,710
December
3,040
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