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Cost analysts for River City Brewing Company have selected the following cost drivers to project mixed costs: volume of beer produced (in hectoliters, i.e., lhL
Cost analysts for River City Brewing Company have selected the following cost drivers to project mixed costs: volume of beer produced (in hectoliters, i.e., lhL = 100 L), total amount of raw materials used (in kilograms), number of batches, volume of water used (in hL), number of cleaning procedures performed (CIPs) and number of new products. Here is the cost data and levels of cost driver activity for 18 months. 1.Using regression, calculate the x and y components using hL of beer produced as the independent variable and dollars of overhead as the dependent variable. 2.Do you think beer produced is an adequate driver to predict overhead? Why or why not? 3.Using regression, compute the y and x from the above table using number of batches as the independent variable and dollars of overhead as the dependent variable. 4.Which driver appears to be the best and why?? 5.Assuming a projected 1,800 hL of beer for next month, compute the projected overhead cost and discuss
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