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Graham Corporation manufactures a drink bottle, model CL24. During 2020, Graham produced 180,000 bottles at a total cost of $810,000 Ryan Corporation has offered
Graham Corporation manufactures a drink bottle, model CL24. During 2020, Graham produced 180,000 bottles at a total cost of $810,000 Ryan Corporation has offered to supply as many bottles as Graham wants at a cost of $4.40 per bottle. Graham anticipates needing 196,000 bottles each year for the next few years Read the requirements Requirement 1a. What is the average cost of manufacturing a drink bottle in 2020? How does it compare to Ryan's offer? The average cost of 4.50 per bottle is greater than Ryan's offer 4 Requirement 1b. Can Graham use the answer in requirement 1a to determine the cost of manufacturing 196,000 drink bottles? Explain Graham cannot take the average manufacturing cost in 2020 to determine the total cost of manufacturing 196,000 drink bottles. The reason is that all of the total costs are fixed costs Requirement 2. Graham's cost analyst uses annual data from past years to estimate the following regression equation with total manufacturing costs of the drink bottle as the dependent variable and drink bottles produced as the independent variable. y $434,000 +$3.00X During the years used to estimate the regression equation, the production of drink bottles varied from 169,000 to 206,000 Using this equation, estimate how much it would cost Graham to manufacture 196,000 drink bottles. How much more or less costly is it to manufacture the bottles rather than to acquire them from Ryan? Estimate how much it would cost Graham to manufacture 196,000 drink bottles, then calculate the cost to purchase the bottles Estimated cost to make the bottles
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