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please solve neat and clean handwriting. Question 1 - Selection of an activity base Fantastic Sweepers of New England manufactures replacement rotary sweeper brooms for
please solve neat and clean handwriting.
Question 1 - Selection of an activity base Fantastic Sweepers of New England manufactures replacement rotary sweeper brooms for large sweeper trucks that clear leaves and snow from city streets. The business is highly seasonal, with the largest demand during and just preceding the fall and winter months. Because there are so many different kinds of sweeper brooms used by its customers, Fantastic Sweepers makes all of its brooms to order. The company has been analyzing its overhead accounts to determine the fixed and variable components for planning purposes. Below are data for the company's Janitorial labor costs over the last nine months. Number of Units Produced Number of Janitorial Workdays 109 January February March April May June July August September a Nota Janitorial Labor Cost $3,840 $3,648 $4.128 $3,456 $4,320 $4,032 $2,784 $2,688 $3,840 77 127 The number of workdays varies from month to month due to the number of weekdays and holidays, as well as vacation days and sick leave taken by the workers in the month. The number of units produced in a month varles depending on demand and the number of workdays in the month. There are two janitors who each work an eight-hour shift each workday. They each can take up to ten days of pald sick leave every year. Their wages during their sick leave and paid vacation are charged to miscellaneous overhead rather than to the Janitorial labor cost account. Required: Prepare a scatterplot using the janitorial labor cost and number of units produced. (b) Prepare a scatterplot using the janitorial labor cost and number of Janitorial workdays. (0) Which measure of activity - number of units produced or janitorial workdays - should be used as the activity base for explaining janitorial labor cost? Briefly explain your reason for choosing the measure. Question 2 - Mixed cost analysis and prediction The number of X-rays taken and X-ray costs over the first nine months of 2019 are given below: January February March April X-Rays Taken 6,250 7,000 5,000 4,250 4,500 3,000 3,750 5,500 5,750 X-Ray Costs $28,000 $27,500 $23,000 $20,000 $22,000 $17,000 $18,000 $24,000 $26,000 May June July August September Required: Using the high-low method, estimate the cost equation for X-ray costs. Using the cost equation you derived in (a), estimate the X-ray costs If 4,600 X-rays are taken. Prepare a scatterplot using the data given. Use Excel to fit a straight line through the data points. Write down the cost equation. Briefly explain why the cost equation you estimated using Excel is different from the one you estimated using the high-low method in (a). Question 3 - Mixed cost analysis and relevant ranges The Roakes Company is interested in developing a cost equation to estimate the fixed and variable components of its monthly manufacturing overhead costs. The company wishes to use machine hours as its measure of activity and has gathered the following data: 2018 January February March April May June July Machine Hours 21.000 25,000 22.000 23.000 20.500 19.000 14.000 10.000 12.000 17.000 16.000 18.500 21.000 24,000 23.000 22.000 20.000 18.000 12.000 13.000 15.000 17.000 15.000 18.000 August September October November December January February March April May June July August September October November December Overhead Costs $84.000 $100,000 $89.500 $90,000 $81,500 $75.500 $70.500 $66.500 $69,000 $75.000 $71,500 $77.000 $86,000 $93.000 $93.000 $87,000 $78,000 $76.500 $67.500 $71.000 $73.500 $72.500 $71.000 $75.000 2019 December 18.000 $75.000 The company leases all of its manufacturing equipment. The lease arrangement calls for a flat monthly fee up to 19.500 machine hours. If the machine hours used exceeds 19,500. the monthly fee becomes strictly variable with respect to the total number of machine hours consumed during the month. Lease expense is a major element of overhead costs. Required: (a) Prepare a scatterplot using the above data. Change the x-axis range to 8.000-26,000 and the y-axis range to 60.000-110,000. Using the high-low method, estimate the cost equation for manufacturing overhead costs using all of the data points given. Do you have any concerns about the accuracy of the cost equation estimated using the high-low method? What are your concerns? Based on the lease arrangement described above, divide the data points into two relevant ranges. State the two relevant ranges. Estimate the cost equation for each relevant range using the high-low method. (d) Assume that the company uses 22,500 machine hours during a month. Based on your results in (c). estimate the total manufacturing overhead costs that would be incurredStep by Step Solution
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