Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Textbook Question
Chapter 3, Problem 36P
DeMarco Company is developing a cost formula for its packing activity. Discussion with the workers in the Packing Department has revealed that packing costs are associated with the number of customer orders, the size of the orders, and the relative fragility of the items (more fragile items must be specially wrapped in bubble wrap and Styrofoam). Data for the past 20 months have been gathered:
Required:
- 1. Using the method of least squares, run a regression using the number of orders as the independent variable.
- 2. Run a multiple regression using three independent variables: the number of orders, the weight of orders, and the number of fragile items. Which regression equation is better? Why?
- 3. Predict the total packing cost for 25,000 orders, weighing 40,000 pounds, with 4,000 fragile items.
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The regression output was based on the following data:
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2. What is the fixed cost for the Color Copy Department?
3. Based on the regression output obtained by the controller, what cost formula should be used to estimate future total costs for the
Color Copy Department? Enter answer as an equation in the form of y= a + bx.
5-a. Use…
Tempe Office Services and Supplies (TOSS) provides various products and services in the Tempe Research Park, home to numerous
high-tech and bio-tech companies. Making color copies is one of its most popular and profitable services. The controller performed a
regression analysis of data from the Color Copy Department with the following results:
Intercept
R-squared
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X coefficient
Month
July
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September
October
November
December
The regression output was based on the following data:
Color Copy
Department
Costs
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Color
Copies
25,900
23,000
19,550
18, 150
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0.970922
22,150
20,400
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Required:
1. What is the variable cost per color copy for TOSS?
2. What is the fixed cost for the Color Copy Department?
3. Based on the regression output obtained by the controller, what cost formula should be used to estimate future total costs for the
Color Copy Department? Enter answer as an equation in the form of y= a…
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Chapter 3 Solutions
Cornerstones of Cost Management (Cornerstones Series)
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