Question
Nantucket Marine Supply is a wholesaler for a large variety of boating and fishing equipment. The companys controller, Alan Denney, has recently completed a cost
Nantucket Marine Supply is a wholesaler for a large variety of boating and fishing equipment. The companys controller, Alan Denney, has recently completed a cost study of the firms material-handling department. The activity measure (independent variable) used in the study was hundreds of pounds of equipment loaded or unloaded at the companys loading dock. Denney compiled the following data. |
Units of Activity | ||||||
Month | (hundreds of pounds of equipment loaded or unloaded) | Material-Handling Department Costs | ||||
January | 2,800 | $ | 12,700 | |||
February | 2,600 | 12,300 | ||||
March | 2,300 | 11,750 | ||||
April | 2,000 | 11,200 | ||||
May | 3,200 | 12,100 | ||||
June | 3,400 | 14,050 | ||||
July | 3,000 | 13,000 | ||||
August | 2,800 | 12,400 | ||||
September | 3,600 | 13,320 | ||||
October | 2,100 | 11,550 | ||||
November | 2,200 | 12,350 | ||||
December | 2,400 | 12,350 | ||||
Required: |
1. | Compute the least-squares regression estimate of the variable- and fixed-cost components in the companys material-handling department costs. (Do not round intermediate calculations. Round "Variable cost per unit" to 2 decimal places and "Monthly fixed cost" to the nearest whole dollar amount.) |
Write the least-squares regression equation for the departments costs. (Do not round intermediate calculations. Round "Variable cost per unit" to 2 decimal places and "Monthly fixed cost" to the nearest whole dollar amount.)
Total monthly cost = ? + ?x
3. | Predict the firms material-handling departments costs for a month when 2,750 units of activity are recorded. (Round Variable cost per unit to 2 decimal places and final answer to the nearest whole dollar amount.) |
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