GreenforGold is a new urban farm who aims to tap into the demand for local food...

   

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GreenforGold is a new urban farm who aims to tap into the demand for local food that became a community focus since the pandemic disruptions. They are proposing to grow strawberries, lettuce and tomatoes in vertical farming units that take a smaller footprint and are going to use artificial lighting and mixes of synthetic nutrients to produce their fruits and vegetables. They've been trying to project what their utility costs (for both water and electricity) will be for the upcoming year and have been able to gather data from another vertical urban farm in the area that focuses on peppers and eggplant. The info about the utilities is captured below Water Electricity Veggie (liters) use (kwH) (kg) Water Cost Electricity Cost January 6,445 8110 1000 $ 631.38 $ 1,389.50 February 7,065 8910 1100 $ 677.88 $ 1,563.60 March 9,235 11710 1450 $ 840.63 $ 2,011.60 April 17,620 22585 2800 $ 1,469.50 $ 3,751.60 May 11,283 11385 1400 $ 994.23 $ 1,959.60 June 12,025 15385 1900 $ 1,049.88 $ 2,599.60 July 20,835 26610 3300 $ 1,710.63 $ 4,395.60 August 21,455 27410 3400 $ 1,757.13 $ 4,523.60 September 23,625 30195 3750 $ 1,919.88 $ 4,969.20 October 24,183 30915 3840 $ 1,961.73 $ 5,084.40 November 15,701 19955 2480 $ 1,325.58 $ 3,330.80 December 10,679 13475 1670 $ 948.93 $ 2,294.00 Annual 180,151 226,645 28,090 $ 15,287.33 $ 37,873.10 December 10,679 13475 1670 $ 948.93 $ 2,294.00 Annual 180,151 226,645 28,090 $ 15,287.33 $ 37,873.10 Requirement 1 Using the High-Low method calculate the variable and fixed costs for water (present in a cost formula) 2 Using the High-Low method calculate the variable and fixed costs for electricity (present in a cost formula) 3 Prepare a scattergraph and least squares regression trendline for assessing the use of veggie production as a cost driver for water (be sure that water cost is the Y axis) a. Is the veggie production a good choice of cost driver? Why or why not? b. What are the fixed and variable costs for water? - be sure to present in a cost formula 6 marks 6 marks 5 marks 2 marks 2 marks 5 marks b. What are the fixed and variable costs for electricity? - be sure to present in a cost formula 2 marks 2 marks 4 Prepare a scattergraph and least squares regression trendline for assessing the use of veggie production as a cost driver for electricity (be sure that electricity cost is the Y axis) a. Is the veggie production a good choice of cost driver? Why or why not? 5 Why is there a difference in the cost formulas using high-low method and the cost formulas using least squares regression? 1 mark 6 The company thinks that they will sell all of their veggies at a profit of $3/kg next year, but their variable costs for water will be 2x last year's amount (there is a drought predicted and the costs will increase), and their electricity costs will be 1.5x the last year's variable rate. a) Will they be able to cover those cost increases (assuming there are no changes to any other inputs, selling and admin expenses)? 5 marks b. What are the fixed and variable costs for electricity? - be sure to present in a cost formula 2 marks 5 Why is there a difference in the cost formulas using high-low method and the cost formulas using least squares regression? 1 mark 6 The company thinks that they will sell all of their veggies at a profit of $3/kg next year, but their variable costs for water will be 2x last year's amount (there is a drought predicted and the costs will increase), and their electricity costs will be 1.5x the last year's variable rate. a) Will they be able to cover those cost increases (assuming there are no changes to any other inputs, selling and admin expenses)? 5 marks 2 marks b) What will their new profit per kg of veggie production end up being? And how much in total? Exojev10 Total 38 marks GreenforGold is a new urban farm who aims to tap into the demand for local food that became a community focus since the pandemic disruptions. They are proposing to grow strawberries, lettuce and tomatoes in vertical farming units that take a smaller footprint and are going to use artificial lighting and mixes of synthetic nutrients to produce their fruits and vegetables. They've been trying to project what their utility costs (for both water and electricity) will be for the upcoming year and have been able to gather data from another vertical urban farm in the area that focuses on peppers and eggplant. The info about the utilities is captured below Water Electricity Veggie (liters) use (kwH) (kg) Water Cost Electricity Cost January 6,445 8110 1000 $ 631.38 $ 1,389.50 February 7,065 8910 1100 $ 677.88 $ 1,563.60 March 9,235 11710 1450 $ 840.63 $ 2,011.60 April 17,620 22585 2800 $ 1,469.50 $ 3,751.60 May 11,283 11385 1400 $ 994.23 $ 1,959.60 June 12,025 15385 1900 $ 1,049.88 $ 2,599.60 July 20,835 26610 3300 $ 1,710.63 $ 4,395.60 August 21,455 27410 3400 $ 1,757.13 $ 4,523.60 September 23,625 30195 3750 $ 1,919.88 $ 4,969.20 October 24,183 30915 3840 $ 1,961.73 $ 5,084.40 November 15,701 19955 2480 $ 1,325.58 $ 3,330.80 December 10,679 13475 1670 $ 948.93 $ 2,294.00 Annual 180,151 226,645 28,090 $ 15,287.33 $ 37,873.10 December 10,679 13475 1670 $ 948.93 $ 2,294.00 Annual 180,151 226,645 28,090 $ 15,287.33 $ 37,873.10 Requirement 1 Using the High-Low method calculate the variable and fixed costs for water (present in a cost formula) 2 Using the High-Low method calculate the variable and fixed costs for electricity (present in a cost formula) 3 Prepare a scattergraph and least squares regression trendline for assessing the use of veggie production as a cost driver for water (be sure that water cost is the Y axis) a. Is the veggie production a good choice of cost driver? Why or why not? b. What are the fixed and variable costs for water? - be sure to present in a cost formula 6 marks 6 marks 5 marks 2 marks 2 marks 5 marks b. What are the fixed and variable costs for electricity? - be sure to present in a cost formula 2 marks 2 marks 4 Prepare a scattergraph and least squares regression trendline for assessing the use of veggie production as a cost driver for electricity (be sure that electricity cost is the Y axis) a. Is the veggie production a good choice of cost driver? Why or why not? 5 Why is there a difference in the cost formulas using high-low method and the cost formulas using least squares regression? 1 mark 6 The company thinks that they will sell all of their veggies at a profit of $3/kg next year, but their variable costs for water will be 2x last year's amount (there is a drought predicted and the costs will increase), and their electricity costs will be 1.5x the last year's variable rate. a) Will they be able to cover those cost increases (assuming there are no changes to any other inputs, selling and admin expenses)? 5 marks b. What are the fixed and variable costs for electricity? - be sure to present in a cost formula 2 marks 5 Why is there a difference in the cost formulas using high-low method and the cost formulas using least squares regression? 1 mark 6 The company thinks that they will sell all of their veggies at a profit of $3/kg next year, but their variable costs for water will be 2x last year's amount (there is a drought predicted and the costs will increase), and their electricity costs will be 1.5x the last year's variable rate. a) Will they be able to cover those cost increases (assuming there are no changes to any other inputs, selling and admin expenses)? 5 marks 2 marks b) What will their new profit per kg of veggie production end up being? And how much in total? Exojev10 Total 38 marks