Grant Corporation manufactures a drink bottle, model CL24. During 2017, Grant produced 180,000 bottles at a total cost of $639,000. Paff Corporation has offered to supply as many bottles as Grant wants at a cost of $3.70 per bottle. Grant anticipates needing 193,000 bottles each year for the next few years. Read the requirements Requirement 1a. What is the average cost of manufacturing a drink bottle in 2017? How does it compare to Paff's offer? The average cost of per bottle is than Paffs offer. Requirement 1b. Can Grant use the answer in requirement 1a to determine the cost of manufacturing 193,000 drink bottles? Explain. Grant V take the average manufacturing cost in 2017 to determine the total cost of manufacturing 193,000 drink bottles. The reason is that Requirement 2. Grant'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 = $435,000 + $2.00x. During the years used to estimate the regression equation, the production of drink bottles varied from 169,000 to 203,000. Using this equation, estimate how much it would cost Grant to manufacture 193,000 drink bottles. How much more or less costly is it to manufacture the bottles rather than to acquire them from Paff? Estimate how much it would cost Grant to manufacture 193,000 drink bottles, then calculate the cost to purchase the bottles. $ Estimated cost to make the bottles Cost to purchase the bottles $ bottles produced as the independent variable: y = $435,000 + $2.00x. During the years used to estimate the regression equation, the production of drink bottles varied from 169,000 to 203,000. Using this equation, estimate how much it would cost Grant to manufacture 193,000 drink bottles. How much more or less costly is it to manufacture the bottles rather than to acquire them from Paff? Estimate how much it would cost Grant to manufacture 193,000 drink bottles, then calculate the cost to purchase the bottles. Estimated cost to make the bottles $ Cost to purchase the bottles $ It will cost $ to purchase the bottles rather than manufacture them in-house. Requirement 3. What other information would you need to be confident that the equation in requirement 2 accurately predicts the cost of manufacturing drink bottles? (Select all that apply.) A. Is the relationship between total manufacturing costs and quantity of drink bottles economically plausible? B. Does the slope of the regression line indicate that a strong relationship exists between manufacturing costs and the number of drink bottles produced? C. How good is the goodness of fit? That is, how well does the estimated line fit the data? D. Can Grant's competitors manufacture drink bottles at a cost less than Grant? Requirements 1. a. What is the average cost of manufacturing a drink bottle in 2017? How does it compare to Paff's offer? b. Can Grant use the answer in requirement 1a to determine the cost of manufacturing 193,000 drink bottles? Explain. 2. Grant'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 = $435,000 + $2.00x During the years used to estimate the regression equation, the production of drink bottles varied from 169,000 to 203,000. Using this equation, estimate how much it would cost Grant to manufacture 193,000 drink bottles. How much more or less costly is it to manufacture the bottles rather than to acquire them from Paff? 3. What other information would you need to be confident that the equation in requirement 2 accurately predicts the cost of manufacturing drink bottles? Print Done