Greene Corporation manufactures a drink bottle, model CL24. During 2020, Greene produced 160,000 bottles at a...
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Greene Corporation manufactures a drink bottle, model CL24. During 2020, Greene produced 160,000 bottles at a total cost of $736,000. Sealy Corporation has offered to supply as many bottles as Greene wants at a cost of $4.75 per bottle. Greene anticipates needing 175,000 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 Sealy's offer? The average cost of $ 4.60 per bottle is less than Sealy's offer. Requirement 1b. Can Greene use the answer in requirement 1a to determine the cost of manufacturing 175,000 drink bottles? Explain. Greene cannot take the average manufacturing cost in 2020 to determine the total cost of manufacturing 175,000 drink bottles. The reason is that some of the total costs are fixed costs and some are variable costs Requirement 2. Greene'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 and drink bottles produced as the independent variable: y = $439,000 + $2.00X. During the years used to estimate the regression equation, the production of drink bottles varied from 148,000 to 185,000. Using this equation, estimate how much it would cost Greene to manufacture 175,000 drink bottles. How much more or less costly is it to manufacture the bottles rather than to acquire them from Sealy? Estimate how much it would cost Greene to manufacture 175,000 drink bottles, then calculate the cost to purchase the bottles. Estimated cost to make the bottles Cost to purchase the bottles Greene Corporation manufactures a drink bottle, model CL24. During 2020, Greene produced 160,000 bottles at a total cost of $736,000. Sealy Corporation has offered to supply as many bottles as Greene wants at a cost of $4.75 per bottle. Greene anticipates needing 175,000 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 Sealy's offer? The average cost of $ 4.60 per bottle is less than Sealy's offer. Requirement 1b. Can Greene use the answer in requirement 1a to determine the cost of manufacturing 175,000 drink bottles? Explain. Greene cannot take the average manufacturing cost in 2020 to determine the total cost of manufacturing 175,000 drink bottles. The reason is that some of the total costs are fixed costs and some are variable costs Requirement 2. Greene'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 and drink bottles produced as the independent variable: y = $439,000 + $2.00X. During the years used to estimate the regression equation, the production of drink bottles varied from 148,000 to 185,000. Using this equation, estimate how much it would cost Greene to manufacture 175,000 drink bottles. How much more or less costly is it to manufacture the bottles rather than to acquire them from Sealy? Estimate how much it would cost Greene to manufacture 175,000 drink bottles, then calculate the cost to purchase the bottles. Estimated cost to make the bottles Cost to purchase the bottles
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Estimated cost to make the bottles is 789000 Cost to purchase the bottles is 831250 Req... View the full answer
Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan
Posted Date:
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