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Garvin Corporation manufactures a children's bicycle, model CT8. Garvin currently manufactures the bicycle frame. During 2012, Garvin made 31.000 frames at a total cost of
Garvin Corporation manufactures a children's bicycle, model CT8. Garvin currently manufactures the bicycle frame. During 2012, Garvin made 31.000 frames at a total cost of $868, 000. Ryan Corporation has offered to supply as many frames as Garvin wants at a cost of $26.50 per frame. Garvin anticipates needing 34.000 frames each year for the next few years. What is the average cost of manufacturing a bicycle frame in 2012? How does it compare to Ryan's offer? Garvin use the answer in requirement 1a to determine the cost of manufacturing 34.000 bicycle frames? Explain. Garvin's cost analyst uses annual data from past years to estimate the following regression equation with total manufacturing costs of the bicycle frame as the dependent variable and bicycle frames produced as the independent variable: During the years used to estimate the regression equation, the production of bicycle frames varied from 29.000 to 34.000. Using this equation, estimate how much it would cost Garvin to manufacture 34.000 bicycle frames. How much more or less costly is it to manufacture the frames rather than to acquire them from Ryan? What is the average cost of manufacturing a bicycle frame in 2012? How does it compare to Ryan's offer? Calculate the average cost of manufacturing a bicycle frame in 2012. How does it compare to Ryan's offer
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