Odie Company manufactures a popular brand of cat repellant known as Cat-B-Gone, which it sells in gallon-size
Question:
Odie Company manufactures a popular brand of cat repellant known as Cat-B-Gone, which it sells in gallon-size bottles with a spray attachment. The majority of Odie's business comes from orders placed by homeowners who are trying to keep neighborhood cats out of their yards. Odie's operating information for the first six months of the year follows:
Required:
1. Prepare a scattergraph of Odie's operating cost and draw the line you believe best fits the data.
2. Based on this graph, estimate Odie's total fixed costs per month.
3. Using the high-low method, calculate Odie's total fixed operating costs and variable operating cost per bottle.
4. Perform a least-squares regression analysis on Odie's data.
5. Determine how well this regression analysis explains the data.
6. Using the regression output, create a linear equation (y = a + bx) for estimating Odie's operating costs.
Step by Step Answer:
Managerial Accounting
ISBN: 978-0078025518
2nd edition
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips