M&S Java, run by two graduates of the university, have just opened their take-out coffee and snack bar on the university campus. At the end of their first month of operations they want to understand which cost driver to choose of two available that they already track in their management information system. The first alternative is kilograms of coffee used each day and the second alternative is cups. M&S Java shuts down completely one day each month to clean and test all equipment thoroughly to make sure they will pass any health inspections.
INSTRUCTIONS
Form groups of two or more students to complete the following requirements:
REQUIRED
1. Using the account analysis method, knowing the fixed cost is $572 for the month, what is the forecast value of consuming 65 kg of coffee beans?
2. If M&S Java use 65 kg of coffee beans, then what is the forecast indirect cost for using the high-low method based on actual values provided in the table?
3. If M&S Java chose linear regression to predict the future MOH costs, then examining the line graphs and the statistics what is the better choice of cost driver for this indirect cost pool and what justifies that choice?
4. If M&S Java use 65 kg of coffee beans, then contrast the results from this requirement to those of requirement 3 and comment on the difference.

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Cost Driver Kg Coffee Beans Regression Statistics KG Coffee Std Errr P-value Outcome Cost Driver 0.9283 26.0 25.0 $13.323 2.041 95.0% 2.0600 Cups R Square Actual $Y $155 150 Observations 485 462 460 460 455 465 Critical value df 461 372 375 373 Observations 368 359 Intercept a 361 316 Confidence 356 7.2915 1.8272 0.0801 0.0270 17.6303 0.0000 Intercept a 0 135 156 168 178 160 132 Confidence Regression Statistics Cups Std Error -S P-value R Square 0.8069 140 152 25.0 $38.332 0.270 95.0% 2.060 12 10.3702 0.0270 3.6963 10.0147 0.0011 0.0000 141 Critical value df 16 y= Regression Line Fit Plot Kg Beans y -Regression Line Fit Plot Cups 65 100 $200 286 322 $150 420 $100 443 453 380 327 18 129 150 148 145 140 138 +X.Y -Predicted y 67 $50 Predictedv 20 40 60 X # Kg of Coffee Beans 80 200 X = Cups Y-y e Residual Piot Y-y e Residual Piot 311 9,600 40.0000 40.00 1,589 S3,589 20.0000 20.00 (20.0000) (40.0000) (20.00) 400 600 X-Kg of Coffee Beans Cups