Management took particular interest inthe debate about whether the Crimson Tide order was sufficiently profitable to justify having accepted the job. You have been requested to conduct additional analysis to de- termine the impact on profitability of such cost-plus rush jobs" To respond to this request, you interviewed a number of employees, and inspected numerous internal documents. You learned the following facts: (a) The factory overhead consists of fixed and variable portions. (b) The relationship between factory overhead expenditures and sales that was observed during the first quarter in Bonnie's department is typical of most departments during most periods. (c) General and administrative costs are primarily fixed and are not impacted by "cost-plus rush jobs (d) Selling expenses are primarily attributable to commissions paid to manufacturer's representatives, and the Crimson Tide order was a direct sale that did not involve commissions. Your Job: 7. Examine sales and factory overhead costs for Bonnie's first quarter data (Part 1), and determine a high-low regression analysis to determine the fixed and variable components of overhead. Don't forget to add back the $250,000 of monthly factory depreciation. You may disregard inventory fluctuations in making this assessment, and focus strictly on Bonnie's data set. Management took particular interest inthe debate about whether the Crimson Tide order was sufficiently profitable to justify having accepted the job. You have been requested to conduct additional analysis to de- termine the impact on profitability of such cost-plus rush jobs" To respond to this request, you interviewed a number of employees, and inspected numerous internal documents. You learned the following facts: (a) The factory overhead consists of fixed and variable portions. (b) The relationship between factory overhead expenditures and sales that was observed during the first quarter in Bonnie's department is typical of most departments during most periods. (c) General and administrative costs are primarily fixed and are not impacted by "cost-plus rush jobs (d) Selling expenses are primarily attributable to commissions paid to manufacturer's representatives, and the Crimson Tide order was a direct sale that did not involve commissions. Your Job: 7. Examine sales and factory overhead costs for Bonnie's first quarter data (Part 1), and determine a high-low regression analysis to determine the fixed and variable components of overhead. Don't forget to add back the $250,000 of monthly factory depreciation. You may disregard inventory fluctuations in making this assessment, and focus strictly on Bonnie's data set
