In this case, Josey decided to switch from the companys traditional cost driver (candle inches produced) to
Question:
In this case, Josey decided to switch from the company’s traditional cost driver (candle inches produced) to a new cost driver (DL hours) because of the possibility that the new line will make candle inches a less effective driver. The following table presents Wedgewood’s total production costs, total candle inches produced, and total DL hours for the past five (5) years:
Using this information, perform two regressions. Both will have production costs as the dependent (or Y) variable, but one will use candle inches and the other will use DLH as the independent (or X) variable. Then use this information, as well as the information from the case, to write a memo to Jeremiah Wedgewood, the current CFO of Wedgewood Candle Company, discussing which driver you suggest the company use. Remember that your memo is going to a senior member of the management team, so you will need to provide adequate support for your arguments and provide a polished final product.
A) Complete the Excel spreadsheet (Critical Thinking Template) attached to this exercise. Attach the completed Excel spreadsheet to this assignment.
B) Use the Wedgewood memo template to create a business memo (Wedgewood Candle Memo Word file template is attached) to Jeremiah Wedgewood and attach the memo to this problem, You are not limited to one page on the memo.
Marketing The Core
ISBN: 978-0078028922
5th edition
Authors: Roger A. Kerin, Steven W. Hartley, William Rudelius