Company produces two styles of tables, dining room and kitchen. Excel presents information on production volume and manufacturing costs. A customer has made a special offer to purchase 50 dining room tables for $230 per table. The production manager has indicated that next months capacity is sufficient to accommodate the order without impacting planned production, and projected sales are already above our breakeven point. The sales representative working with the customer has looked at the above production and recommends accepting the special order, based on his calculations of (1) average cost calculation of just under $217.75 per table and (2) an incremental cost per table using his high-low analysis of just under $211.35.

The sales rep has asked you to verify his above calculations.

Believing he can impress management with a simple regression analysis, he asks you to develop a cost-estimation equation for total production and manufacturing costs. What is your models cost function prediction, and how much confidence do you have in its predictive ability?

What do the two calculations provided by the sales rep and your simple regression suggest regarding the desirability of accepting the offer?

Management has asked you to provide additional analysis of manufacturing costs to determine whether the order should be accepted. This may require additional analysis and critical thinking. What does your new analysis suggest regarding the desirability of accepting the offer?

Dining Room Month Tables Produced 1 50 Kitchen Tables Produced Total Tables Produced 200 250 2 105 100 205 3 105 180 285 4 40 170 210 5 75 100 175 110 100 210 90 155 245 50 200 250 | 6|7|8|9|1 70 150 220 Total Manufacturing Costs $46,650 $50,888 $60,630 $37,943 $42,120 $52,575 $53,018 $47,325 $47,235 $44,475 $69,350 $59,933 $52,043 $55,380 $46,223 $60,120 $60,435 $53,708 $57,600 $37,650 10 80 100 180 11 180 135 315 105 280 175 180 13 75 14 110 125 255 235 195 15 85 110 16 120 300 180 140 17 120 260 18 90 160 170 19 100 250 270 165 20 60 105 Dining Room Month Tables Produced 1 50 Kitchen Tables Produced Total Tables Produced 200 250 2 105 100 205 3 105 180 285 4 40 170 210 5 75 100 175 110 100 210 90 155 245 50 200 250 | 6|7|8|9|1 70 150 220 Total Manufacturing Costs $46,650 $50,888 $60,630 $37,943 $42,120 $52,575 $53,018 $47,325 $47,235 $44,475 $69,350 $59,933 $52,043 $55,380 $46,223 $60,120 $60,435 $53,708 $57,600 $37,650 10 80 100 180 11 180 135 315 105 280 175 180 13 75 14 110 125 255 235 195 15 85 110 16 120 300 180 140 17 120 260 18 90 160 170 19 100 250 270 165 20 60 105