Question: Question Content Area Method of Least Squares, Developing and Using the Cost Formula The method of least squares was used to develop a cost equation

Question Content Area

Method of Least Squares, Developing and Using the Cost Formula

The method of least squares was used to develop a cost equation to predict the cost of receiving purchased parts at a video game manufacturer. Ninety-six data points from monthly data were used for the regression. The following computer output was received:

Intercept	161,000
Slope	215

The cost driver used was number of parts inspected.

Required:

1. What is the cost formula?

Total cost of receiving = $fill in the blank 1 + ( $fill in the blank 2

Fixed cost per monthNumber of parts inspectedVariable rate

)

2. Using the cost formula from Requirement 1, identify each of the following: independent variable, dependent variable, Variable rate per professional hour, and fixed cost per month.

Independent variable	$210$147,400Number of parts inspectedTotal cost of receiving
Dependent variable	$210$147,400Number of parts inspectedTotal cost of receiving
Variable rate per professional hour	$215$161,000Number of parts inspectedTotal cost of receiving	per part inspected
Fixed cost per month	$215$161,000Number of parts inspectedTotal cost of receiving

3. Using the cost formula, predict the cost of receiving for a month in which 6,800 parts are inspected.

Total cost of receiving = $fill in the blank 8

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Method of Least Squares, Developing and Using the Cost Formula from monthly data were used for the regression. The following computer output was received: Intercept 2 0 9 , 4 0 0 Slope 3 1 0 The cost...

Using Regression to Calculate Fixed Cost, Calculate the Variable Rate, Construct a Cost Formula, and Determine Budgeted Cost Pizza Vesuvio makes specialty pizzas, Data for the past 8 months were...

3-36 3-37 3-50 Use the following information for Brief Exercises 3-30 and 3-31: During the most recent year, Pelham Company had the following data associated with the product it makes: 400 14,000...

Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period that Differs from the Data Period Speedy Petes is a small start-up company that delivers high-end coffee...

Please help me to learn this with full description if possible Classifying Costs as Fixed and Variable in a Service Organization Alva Community Hospital has ve laboratory technicians who are...

Method of Least Squares, Developing and Using the Cost Formula The method of least squares was used to develop a cost equation to predict the cost of receiving purchased parts at a video game...

Let X1, . . . , Xn be i.i.d. with the Poisson distribution having mean . Let Y = a. Suppose that we wish to test the hypotheses H0 : 1 versus H1 :

How do quality and time considerations affect capital budgeting decisions?

In a non - liquidated distribution a partner can have either recognized gain or recognize loss

When two FBD blocks are connected with a solid line that means that Question 3 options: 1 ) A value is transferred along the line 2 ) The program is offline 3 ) The program is online 4 ) A bit status...