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Possibility #1 Possibility #2 Possibility #3 Indirect Machine # of # of Mfg Labor Week Hours Batches DMLH Costs 1 97.50 21 55.00 $1,475.00 2
Possibility #1 | Possibility #2 | Possibility #3 | Indirect | ||||
Machine | # of | # of | Mfg Labor | ||||
Week | Hours | Batches | DMLH | Costs | |||
1 | 97.50 | 21 | 55.00 | $1,475.00 | |||
2 | 57.50 | 9 | 47.50 | $887.50 | |||
3 | 102.50 | 18 | 87.50 | $1,645.00 | |||
4 | 117.50 | 15 | 37.50 | $1,290.00 | |||
5 | 85.00 | 9 | 36.25 | $940.00 | |||
6 | 60.00 | 18 | 47.50 | $1,203.75 | |||
7 | 85.00 | 15 | 37.50 | $1,487.50 | |||
8 | 110.00 | 19 | 43.75 | $1,513.75 | |||
9 | 77.50 | 16 | 45.00 | $1,255.00 | |||
10 | 90.00 | 14 | 25.00 | $1,146.25 | |||
11 | 75.00 | 13 | 58.75 | $962.50 | |||
12 | 120.00 | 15 | 56.25 | $1,820.00 | |||
Required: | |||||||
(1) Using the data observations for Possibility #3, derive a cost function using the high-low method. | |||||||
(2) If Harrington anticipates 31.25 DMLH for Week 13, what are their expected indirect manufacturing costs | |||||||
for that week, using the cost function derived in #1? | |||||||
(3) What is the major disadvantage of the High-Low method? | |||||||
(4) Using Excel's simple regression, which of the three possible cost drivers is the best choice? | |||||||
Show the scattergraph, equation, and r value for all three; justify your choice using the 3 criteria. | |||||||
(5) If Harrington anticipates 31.25 DMLH hours, 20 batches, and 93.75 machine hours for Week 13, what are | |||||||
their expected indirect manufacturing labor costs for that week, using the cost function from your | |||||||
BEST choice in #4? |
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