Question

Aridge Business Publishers Module 15 Cost Behavior, Activity Analysis, and Cost Estimation Month Total Costs January February March April May Sales (Dozens) 6,800 7,800 5,500 1,000 6,100 4,500 $30,650 35,336 29,700 25,000 30,600 28,670 June Required 4. Using the high-low method, develop a cost-estimating equation for total monthly costs. b. 1. Plot the equation developed in requirement (a). 2. Using the same graph, develop a scatter diagram of all observations for the cookie shop. Select representative high and low values and draw a second cost-estimating equation. c. Which is a better predictor of future costs? Why? d. If you decided to develop a cost-estimating equation using least-squares regression analysis, should you include all the observations? Why or why not? c. Mention two reasons that the least-squares regression is superior to the high-low and scatter diagram methods of cost estimation. 11:26. Multiple Cost Drivers Newman's Own manufactures a variety of specialty salad dressings. Production runs are both high- volume and low-volume activities, depending on customer orders. Assume the following represents general manufacturing costs (manufacturing overhead) and each cost's related activity cost driver for Newman's Own. LO5 Newma MI Level Total Cost Units of Cost Driver 20,000 machine hours 400 customer orders 15 products Unit Batch Product $600,000 40,000 84,000 The lime vinaigrette dressing required 1,000 machine hours to fill 60 customer orders for a total of 4,000 cases. Required 4. Assuming all manufacturing overhead is estimated and predicted on the basis of machine hours, determine the predicted total overhead costs to produce the 4,000 cases of lime vinaigrette. 6. Assuming manufacturing overhead is estimated and predicted using separate rates for machine hours, customer orders, and products (a multiple-level cost hierarchy), determine the predicted total overhead costs to produce the 4,000 cases of lime vinaigrette. facturing overhead using machine hours versus using multiple Cal

my professor just wants part A answered

Answer 1

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Answer is highlighted in yellow: Solution: a) Using high-low costing method: Total cost Highest level $ 35,336 Lowest level $ 25,000 Difference $ 10,336 Units 7800 1000 6800 Variable cost per unit = (10336/6800) = $ 1.52 per unit Fixec cost = Total cost - Variable cost = (35336) - (7800*1.52) = $ 23,480 a) Cost-estimating equation: Total Cost a + bx Total Cost ($ 23,480) + ($ 1.52*x) X = a = Number of units Fixed cost Variable cost per unit b =