The controller of Brokaw Production has collected the following monthly cost data for analyzing the behavior of

Question:

The controller of Brokaw Production has collected the following monthly cost data for analyzing the behavior of utility costs.


Instructions

a. Determine the fixed costs and unit variable costs using regression analysis. (We recommend the use of Excel.)

b. Prepare a scatter plot using Excel. Present the cost equation line estimated in part (a).

c. What utility cost does the cost equation estimate for a level of activity of 500 machine hours? By what amount does this differ from March’s observed cost for 500 machine hours?

d. What utility cost does the cost equation estimate for a level of activity of 700 machine hours? By what estimate does this differ from June’s observed cost for 700 machine hours?

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Related Book For  book-img-for-question

Managerial Accounting Tools For Business Decision Making

ISBN: 9781119754053

9th Edition

Authors: Jerry J Weygandt, Paul D Kimmel, Jill E Mitchell

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