Method of Least Squares, Budgeted Time Period Is Different from Time Period Used to Generate Results The
Question:
Method of Least Squares, Budgeted Time Period Is Different from Time Period Used to Generate Results
The method of least squares was used to develop a cost equation to predict the cost of receiving purchased parts at a video game manufacturer. Ninety-six data points from monthly data were used for the regression. The following computer output was received:
Intercept | 173,700 |
Slope | 360 |
The cost driver used was number of parts inspected.
Required:
1. What is the cost formula for a year?
Total annual cost of receiving = ( fill in the blank 1 x $fill in the blank 2 ) + ( $fill in the blank 3 ×
Fixed cost per monthNumber of parts inspected in a yearVariable rate
)
2. Using the cost formula from Requirement 1, predict the cost of parts inspection for a year in which 16,500 parts are inspected.
Total annual cost of receiving = $fill in the blank 5
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen