Problem 6-49 Managerial Accounting 12 Edition

Review Exhibit 6-12, which is a Tableau portrayal of the regression results for Donut Desire's five donut shop locations, based on the entire ten year data set (i.e., the past ten years).

Required: The regression equation for the North Shop location's utility cost, based on the ten-year data set (displayed graphically in Exhibit 6-12) was given in the chapter as follows (with rounding). Estimated utility cost for one month = 350 + .0430x where x denotes the North Shop's activity for one month.

Although it was not discussed in the chapter, the R^2 for the regression equation is .8649

1. From a cost behavior perspective, explain the meaning of the intercept in the North shop's regression equation.

2. From a cost behavior perspective, explain the meaning of the slope in the North shop's regression equation.

3. Refer to Exhibit 6-12, the graphed regression equation for the five Donut Desire shops, as displayed by Tableau. Where would the North shop's utility cost rank amount the five shops in a month in which each of the shops experienced a demand of 29,000 units (i.e., thousands of bakery items sold)?

4. Explain the meaning of the R^2 given for the North shop's regression equation.

III khibit 6-11. We were able Eldions from our data by using data analy analysis of the ten-year data set for Donut Desire's U, ising powerful data visualization software, we can much more clearly draw out and communicate the story the data bas to jel, One ever-more-widely sed data visualization software package is called Tableau, It was first marketed to the business community by Tableau Software in 20003, and the company now has tens of housands of enthusiastic users of its software, We can define Tableau as an interactive, ve lo in Total (Ten-Year Data Sen data visualization software package used to present data analytic results in a graphical or pictorial format that facilitates drawing insights and conclusions from the data. Let's look first at Exhibit 612. This exhibit, generated by Tableau, shows the regres- oresults graphically for all five shop locations based on the entire ten-year data set. graph do not intersect at the origin, that is, the (0,0) point on the two axes. The ana- a this Tableau display chose to focus on the area of the graphs "where the horizontal axis shows only the relevant range of activity, which is , displayed in Exhibit 6-12 is the scatter plot of the ten-year data set, color-coded Slope sion A Op location. Notice that the horizontal and vertical axes in this regression equation 0.0430 0.0322 who generated So st he action is, *" 0.0428 Exhibit 6-12 (TABLEAU) Regression Analysis, by Shop Location, Based on Ten-Year Data Set, Donut Desire, Inc. O.0537 Foughly from 13,000 to 25,000 units (i.e., dozens of bakery items sold). The monthly 0.0430 0.0430 Utility cost Cost Estimation, w ta for the company DONUT DESIRE 1,800 - on derived there is 1,600 1,400 1,200 e intercept and ch displays the entire ten-year data. The cost ereceding ten lity cost has ar (1,920) is he past ten 1,000 Activity 800 14K 15K 16K 17K 18K 19K 20K 21K 22K 23K 24K 25K East INorth South West I Central Location "Activity measured in dozens of bakery items sold; K denotes thousands. III khibit 6-11. We were able Eldions from our data by using data analy analysis of the ten-year data set for Donut Desire's U, ising powerful data visualization software, we can much more clearly draw out and communicate the story the data bas to jel, One ever-more-widely sed data visualization software package is called Tableau, It was first marketed to the business community by Tableau Software in 20003, and the company now has tens of housands of enthusiastic users of its software, We can define Tableau as an interactive, ve lo in Total (Ten-Year Data Sen data visualization software package used to present data analytic results in a graphical or pictorial format that facilitates drawing insights and conclusions from the data. Let's look first at Exhibit 612. This exhibit, generated by Tableau, shows the regres- oresults graphically for all five shop locations based on the entire ten-year data set. graph do not intersect at the origin, that is, the (0,0) point on the two axes. The ana- a this Tableau display chose to focus on the area of the graphs "where the horizontal axis shows only the relevant range of activity, which is , displayed in Exhibit 6-12 is the scatter plot of the ten-year data set, color-coded Slope sion A Op location. Notice that the horizontal and vertical axes in this regression equation 0.0430 0.0322 who generated So st he action is, *" 0.0428 Exhibit 6-12 (TABLEAU) Regression Analysis, by Shop Location, Based on Ten-Year Data Set, Donut Desire, Inc. O.0537 Foughly from 13,000 to 25,000 units (i.e., dozens of bakery items sold). The monthly 0.0430 0.0430 Utility cost Cost Estimation, w ta for the company DONUT DESIRE 1,800 - on derived there is 1,600 1,400 1,200 e intercept and ch displays the entire ten-year data. The cost ereceding ten lity cost has ar (1,920) is he past ten 1,000 Activity 800 14K 15K 16K 17K 18K 19K 20K 21K 22K 23K 24K 25K East INorth South West I Central Location "Activity measured in dozens of bakery items sold; K denotes thousands