Marcia Stanton is the new manager of the materials storeroom for Taylor Manufacturing. Marcia has been...
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Marcia Stanton is the new manager of the materials storeroom for Taylor Manufacturing. Marcia has been asked to estimate future monthly purchase costs for part #696, used in two of Taylor's products. Marcia has purchase cost and quantity data for the past 9 months as follows: (Click the icon to view the data for the past 9 months.) Estimated monthly purchases for this part based on expected demand of the two products for the rest of the year are as follows: (Click the icon to view the expected demand for the rest of the year.) Read the requirements. Data table Month Cost of Purchase Quantity Purchased January 12,450 2,670 parts February 12,440 2,890 March 17,227 4,072 April 15,838 3,724 May 13,155 2,956 June 13,900 3,365 July 15,336 3,655 August 10,087 2,287 September 14,950 3,542 Print Done wwwwwwwwwwww.................. . Requirements 1. The computer in Marcia's office is down, and Marcia has been asked to immediately provide an equation to estimate the future purchase cost for part #696. Marcia grabs a calculator and uses the high-low method to estimate a cost equation. What equation does she get? 2. Using the equation from requirement 1, calculate the future expected purchase costs for each of the last 3 months of the year. 3. After a few hours Marcia's computer is fixed. Marcia 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 Marcia obtains is as follows: y $1,909.6+ 3.71X 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. Marcia Stanton is the new manager of the materials storeroom for Taylor Manufacturing. Marcia has been asked to estimate future monthly purchase costs for part #696, used in two of Taylor's products. Marcia has purchase cost and quantity data for the past 9 months as follows: (Click the icon to view the data for the past 9 months.) Estimated monthly purchases for this part based on expected demand of the two products for the rest of the year are as follows: (Click the icon to view the expected demand for the rest of the year.) Read the requirements. Data table Month Cost of Purchase Quantity Purchased January 12,450 2,670 parts February 12,440 2,890 March 17,227 4,072 April 15,838 3,724 May 13,155 2,956 June 13,900 3,365 July 15,336 3,655 August 10,087 2,287 September 14,950 3,542 Print Done wwwwwwwwwwww.................. . Requirements 1. The computer in Marcia's office is down, and Marcia has been asked to immediately provide an equation to estimate the future purchase cost for part #696. Marcia grabs a calculator and uses the high-low method to estimate a cost equation. What equation does she get? 2. Using the equation from requirement 1, calculate the future expected purchase costs for each of the last 3 months of the year. 3. After a few hours Marcia's computer is fixed. Marcia 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 Marcia obtains is as follows: y $1,909.6+ 3.71X 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.
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Answer rating: 100% (QA)
1 To estimate the future purchase cost for part 4696 using the highlow method Marcia can use the following equation textCost textFixed Cost textVariab... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Posted Date:
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