Kendrick Anderson Furniture Maker, LLC creates custom tables in Atlanta. Assume that the following represents monthly...

 

Transcribed Image Text:

Kendrick Anderson Furniture Maker, LLC creates custom tables in Atlanta. Assume that the following represents monthly information on production volume and manufacturing costs since the company started operations Total Manufacturing Costs Total Tables Produced Living Room Tables Produced Dining Room Tables Produced June Year 1 $71,000 57,500 ..... ..... 110 25 85 July. August September October.. November.. December. January Year 2.. February. March 90 130 .... 45 ..... 45 79,724 15 115 64,250 95 36 59 57,300 60,900 62,700 70,130 68,400 57,400 76 24 52 92 48 44 105 110 24 50 81 60 102 .... 20 82 81 25 56 April May. 105,790 74,750 74,290 66,500 142 102 22 40 103 ... 125 June 115 15 18 100 July August September October. 106 88 49,888 72,668 71,700 74,200 54,900 85 28 55 81 30 57 61 116 120 39 November.. 120 90 December. 72 18 54 Required a. Use the high-low method to develop a cost-estimating equation for total manufacturing costs. Interpret the meaning of the "fixed" costs and comment on the results. b. Use the chart feature of a spreadsheet to develop a scatter graph of total manufacturing costs and total units produced. Use the graph to identify any unusual observations. c. Excluding any unusual observations, use the high-low method to develop a cost-estimating equation for total manufacturing costs. Comment on the results, comparing them with the results in requirement (a). d. Use simple regression analysis to develop a cost-estimating equation for total manufacturing costs. What advantages does simple regression analysis have in comparison with the high-low method of cost estimation? Why must analysts carefully evaluate the data used in simple regression analysis? e. A customer has offered to purchase 50 dining room tables for $452 per table. Management has asked your advice regarding the desirability of accepting the offer. What advice do you have for management? Additional analysis is required. Kendrick Anderson Furniture Maker, LLC creates custom tables in Atlanta. Assume that the following represents monthly information on production volume and manufacturing costs since the company started operations Total Manufacturing Costs Total Tables Produced Living Room Tables Produced Dining Room Tables Produced June Year 1 $71,000 57,500 ..... ..... 110 25 85 July. August September October.. November.. December. January Year 2.. February. March 90 130 .... 45 ..... 45 79,724 15 115 64,250 95 36 59 57,300 60,900 62,700 70,130 68,400 57,400 76 24 52 92 48 44 105 110 24 50 81 60 102 .... 20 82 81 25 56 April May. 105,790 74,750 74,290 66,500 142 102 22 40 103 ... 125 June 115 15 18 100 July August September October. 106 88 49,888 72,668 71,700 74,200 54,900 85 28 55 81 30 57 61 116 120 39 November.. 120 90 December. 72 18 54 Required a. Use the high-low method to develop a cost-estimating equation for total manufacturing costs. Interpret the meaning of the "fixed" costs and comment on the results. b. Use the chart feature of a spreadsheet to develop a scatter graph of total manufacturing costs and total units produced. Use the graph to identify any unusual observations. c. Excluding any unusual observations, use the high-low method to develop a cost-estimating equation for total manufacturing costs. Comment on the results, comparing them with the results in requirement (a). d. Use simple regression analysis to develop a cost-estimating equation for total manufacturing costs. What advantages does simple regression analysis have in comparison with the high-low method of cost estimation? Why must analysts carefully evaluate the data used in simple regression analysis? e. A customer has offered to purchase 50 dining room tables for $452 per table. Management has asked your advice regarding the desirability of accepting the offer. What advice do you have for management? Additional analysis is required.

Answer rating: 100% (QA)

Piedmont Table MA1435 Cost Estimation Interpretation and Analysis Requires Computer Spreadsheet LO2 3 Piedmont Table Company produces two styles of tables dining room and kitchen Presented is monthly ... View the full answer