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1 Required information The Hard Rock Mining Company wants to separate its utilities cost into variable and fixed elements for planning purposes. The controller believes
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The Hard Rock Mining Company wants to separate its utilities cost into variable and fixed elements for planning purposes. The controller believes tons mined might be a good base for developing a cost formula. The production superintendent disagrees; she thinks direct laborhours would be a better base. Quarterly data for tons mined, direct laborhours, and utilities cost are as follows:
Required:
a Using tons mined as the independent variable, prepare a scattergraph that plots tons mined on the horizontal axis and utilities cost on the vertical axis.
b Using the leastsquares regression method, estimate the variable utilities cost per ton mined and the total fixed utilities cost per quarter. Express these estimates in the form Y a bX
Round the variable cost per unit to decimal places and Fixed Cost to the nearest whole dollar amount.
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