Case 1 Assignment Green Care Limited manufactures environmentally friendly electric lawn mowers, and demand has been growing rapidly. Management would like to develop cost formulas for planning and decision making. The company's cost analyst has concluded that utilities cost is a mixed cost, and she is attempting to find an activity base with which the cost might be closely related. The controller has suggested that units produced might be a good base to use in developing a cost formula. The production superintendent disagrees; he thinks that direct labour-hours would be a better base since different lawn mower models have different production requirements. The cost analyst has decided to try both bases and has assembled the following information for the past eight months: 3 Direct Utilities Month Units Produced Labour-Hours Cost January60,000 15,000 $200,000 February 44,0009,000 180,000 March 84,000 12,000 240,000 48,00018,000300,000 72,000 30,000400,000 3 May June 100,000 27,000420,000 July 120,00024,000 340,000 August 112,000 33,000 480,000 Required: 1. Using units produced as the independent (X) variable a) Determine a cost formula for utilities cost using the least-squares regression method 2. Using direct labour-hours as the independent (X) variable, repeat 1(a) above. 3. Would you recommend that the company use units produced or direct labour-hours as a base for planning utilities cost? Explain your answer 4. Evaluate the economic plausibility of using units produced or direct labour-hours to predict utilities cost. rds. IP -English (United States)