The Double Door Corp has gathered the following data on its overhead and associated costs for the company’s most recent 12 months: Customer Mon Transactions Total Cost 1 2,100 $22,738 2 3,300 $34,388 3 3,100 $35,113 4 2,500 $27,623 5 2,700 $27,463 6 2,300 $27,888 7 1,500 $16,688 8 2,890 $29,133 9 2,495 $25,788 10 1,920 $21,836 11 3,450 $38,553 12 3,050 $34,220 Required: 1.) Using regression analysis, determine: a) the variable cost per order b) the fixed cost each month c) the estimated cost at a volume of 3,000 orders
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The Double Door Corp has gathered the following data on its
|
Customer |
||
|
Mon |
Transactions |
Total Cost |
|
1 |
2,100 |
$22,738 |
|
2 |
3,300 |
$34,388 |
|
3 |
3,100 |
$35,113 |
|
4 |
2,500 |
$27,623 |
|
5 |
2,700 |
$27,463 |
|
6 |
2,300 |
$27,888 |
|
7 |
1,500 |
$16,688 |
|
8 |
2,890 |
$29,133 |
|
9 |
2,495 |
$25,788 |
|
10 |
1,920 |
$21,836 |
|
11 |
3,450 |
$38,553 |
|
12 |
3,050 |
$34,220 |
Required:
1.) Using regression analysis, determine:
- a) the variable cost per order
- b) the fixed cost each month
- c) the estimated cost at a volume of 3,000 orders
2.) Based on the above analysis, is there a strong relationship between customer transactions and total cost.
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