Fraser River Manufacturing has been trying to understand their costs for the current period and to help them determine the budgeted unit cost for manufacturing for next year The accountant has provided you with the following information for the past six months Production in Month Cost Units July $49,011 22,200 August 58,750 26,400 September 85,245 40,500 October 76,400 31,000 November 62,500 29,000 December 86,851 39,800 Required Using the high low method, determine the cost function for production cost for Fraser 4 marks Using regression analysis, determine the cost function for production cost for Fraser (See Regression output below) 2 marks If they were expecting to produce 27,500 units in January, what would the estimated cost be under each method (high low and regression) Which would you recommend Fraser use Why Are there any other considerations you would make in determining the estimated cost for January 3 marks ow SUMMARY OUTPUT Regression Statistics Multiple R 0 967672 R Square 0 936389 X Variable 1 Residual Plot Adjusted F 0 920486 Standard 4332 673 10000 Observatic 6 5000 Residuals ANOVA df SS MS F gnificance F 10,000 20,000 30,000 40,000 50,000 Regression 1 1 11E 09 1 11E 09 58 88172 0 001551 5000 Residual 4 75088237 18772059 X Variable 1 Total 5 1 18E 09 Coefficientsandard Err, t Stat P value Lower 95 Upper 95 ower 95 09pper 95 0 Intercept 5960 47 8504 583 0 700854 0 522021 17652 29572 98 17652 29572 98 X Variable 2 027497 0 264223 7 673442 0 001551 1 293897 2 761097 1 293897 2 761097 X Variable 1 Line Fit Plot RESIDUAL OUTPUT $100,000 $90,000 ObservationPredicted Y Residuals dard Residuals $80,000 50970 9 1959 9 0 50575 $70,000 2 59486 39 736 39 0 19002 $60,000 3 88074 1 2829 1 0 73004 $50,000 4 68812 88 7587 124 1 957836 $40,000 5 64757 88 2257 88 0 58264 $30,000 Predicted Y 6 86654 85 196 1501 0 050616 $20,000 $10,000 SO 0 10,00020,00030,00040,00050,000 X Variable 1

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 29, 2024

Fraser River Manufacturing has been trying to understand their costs for the current period and to help them determine the budgeted unit cost for manufacturing

Fraser River Manufacturing has been trying to understand their costs for the current period and to help them determine the budgeted unit cost for manufacturing for next year. The accountant has provided you with the following information for the past six months:

Production in

Month Cost Units

July $49,011 22,200

August 58,750 26,400

September 85,245 40,500

October 76,400 31,000

November 62,500 29,000

December 86,851 39,800

Required:

Using the high-low method, determine the cost function for production cost for Fraser. [4 marks]
Using regression analysis, determine the cost function for production cost for Fraser. (See Regression output below) [2 marks]
If they were expecting to produce 27,500 units in January, what would the estimated cost be under each method (high/low and regression)? Which would you recommend Fraser use? Why? Are there any other considerations you would make in determining the estimated cost for January? [3 marks]ow

SUMMARY OUTPUT Regression Statistics Multiple R 0.967672 R Square 0.936389 X Variable 1 Residual Plot Adjusted F 0.920486 Standard | 4332.673 10000 Observatic 6 5000 Residuals ANOVA df SS MS F gnificance F 10,000 20,000 30,000 40,000 50,000 Regression 1 1.11E+09 1.11E+09 58.88172 0.001551 -5000 Residual 4 75088237 18772059 X Variable 1 Total 5 1.18E+09 Coefficientsandard Err, t Stat P-value Lower 95%Upper 95%ower 95.09pper 95.0% Intercept 5960.47 8504.583 0.700854 0.522021 -17652 29572.98 -17652 29572.98 X Variable 2.027497 0.264223 7.673442 0.001551 1.293897 2.761097 1.293897 2.761097 X Variable 1 Line Fit Plot RESIDUAL OUTPUT $100,000 $90,000 ObservationPredicted Y Residuals dard Residuals $80,000 50970.9 -1959.9 -0.50575 $70,000 2 59486.39 -736.39 -0.19002 $60,000 3 88074.1 -2829.1 -0.73004 > $50,000 4 68812.88 7587.124 1.957836 $40,000 5 64757.88 -2257.88 -0.58264 $30,000 Predicted Y 6 86654.85 196.1501 0.050616 $20,000 $10,000 SO 0 10,00020,00030,00040,00050,000 X Variable 1