The managers of Peterson's Catering Company are analyzing the costs involved in providing catering services. Managers have
Question:
The managers of Peterson's Catering Company are analyzing the costs involved in providing catering services. Managers have selected the following cost drivers: units of meals produced, total deliveries, number of VIP services, number of new customers, and new products developed. Here are the cost data and levels of cost driver activity for the past 16 months.
a. Using multiple regression, find the cost driver rates for each of the cost drivers.
b. Management estimates the following levels of cost driver volumes for the next month for the budget. What is the estimated cost for the budget? (Don't forget to include the intercept of the regression in your estimate.)
12,000............................................................. Meals produced
1,100............................................................... Deliveries
300.................................................................. VIP services
5...................................................................... New customers
2...................................................................... New products
c. Peterson's Catering Company is considering outsourcing deliveries. Compared to your answer in requirement b., how much would be saved per month by outsourcing the delivery service (before considering the cost ofoutsourcing)?
Step by Step Answer:
Managerial Accounting An Introduction to Concepts Methods and Uses
ISBN: 978-0324639766
10th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil