Required information The Hard Rock Mining Company is developing cost formulas for management planning and decision-making purposes. The company's cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base that correlates with the cost. The controller has suggested that tons mined might be a good base to use in developing a cost formula. The production superintendent disagrees; she thinks that direct labor-hours would be a better base. The cost analyst has decided to try both bases and has assembled the following information: Direct Labor- Quarter Tons Mined Hours Utilities Cost Year 1: First 34,000 6,900 $ 69,000 Second 21,000 4,900 $ 64,000 Third 39,000 5,900 $ 79,000 Fourth 31,000 7,900 $ 94,000 Year 2: First 37,000 13,800 $ 119,000 Second 44,000 14,700 $ 124,000 Third 49,000 11,800 $ 104,000 Fourth 47,000 14,800 $ 139,000 Required: 1-a. Using tons mined as the independent variable, prepare a scattergraph that plots tons mined on the horizontal axis and utilities cost on the vertical axis. Instructions: 1. On the graph below, use the point tool (Year 1-1st quarter) to plot tons mined on the horizontal axis and utilities cost on the Vertical axis. 2. Repeat the same process for the plotter tools (Year 1-2nd quarter to Year 2-4th quarter). 3. To enter exact coordinates, click on the point and enter the values of x and y. 4. To remove a point from the graph, click on the point and select delete option. Utilities Cost 160000 Tools 140000 Year 1- 1st qu Year 1 - 2nd q 120000 100000 80000 Year 1 - 3rd q Year 1 - 4th qu 60000 Instructions: 1. On the graph below, use the point tool (Year 1-1st quarter) to plot tons mined on the horizontal axis and utilities cost on the Vertical axis. 2. Repeat the same process for the plotter tools (Year 1-2nd quarter to Year 2-4th quarter). 3. To enter exact coordinates, click on the point and enter the values of x and y. 4. To remove a point from the graph, click on the point and select delete option. Utilities Cost 160000 Tools Yealoost qu Year 1 - 2nd q 140000 120000 Year 1 - 3rd q Year 1 - 4th qu 100000 80000 Year 2- 1st qu Year 2 - 2nd qi 60000 40000 Year 2 - 3rd q Year 2-4th qu 20000 0 10000 30000 20000 40000 50000 60000 Tons Mined 1-b. Using the least-squares regression method, estimate the variable utilities cost per ton mined and the total fixed utilities cost per quarter. Express these estimates in the form Y = a +bX. (Round the Variable cost per unit to 2 decimal places and Fixed Cost to the nearest whole dollar amount.) Y = 2-a. Using direct labor-hours as the independent variable, prepare a scattergraph that plots direct labor-hours on the horizontal axis and utilities cost on the vertical axis. Instructions: 1. On the graph below, use the point tool (Year 1-1st quarter) to plot direct labor-hours on the horizontal axis and utilities cost on the Vertical axis. 2. Repeat the same process for the plotter tools (Year 1-2nd quarter to Year 2-4th quarter). 3. To enter exact coordinates, click on the point and enter the values of x and y. 4. To remove a point from the graph, click on the point and select delete option. Year 1 - 1st quarter $180,000 Year 1 - 2nd quarter $150,000 Year 1 - 3rd quarter $120,000 Utilities Costa $90,000 Year 1 - 4th quarter $60,000 Year 2 - 1st quarter $30,000 Year 2 - 2nd quarter SO 0 3,000 6,000 9,000 12,000 15,000 18,000 Year 2 - 3rd quarter Direct Labor-Hours reset 2-b. Using the least-squares regression method, estimate the variable utilities cost per direct labor-hour and the total fixed utilities cost per quarter. Express these estimates in the form Y = a +bX. (Round the Variable cost to 2 decimal places and Fixed Cost to the nearest whole dollar amount.) Y= Required information The Hard Rock Mining Company is developing cost formulas for management planning and decision-making purposes. The company's cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base that correlates with the cost. The controller has suggested that tons mined might be a good base to use in developing a cost formula. The production superintendent disagrees; she thinks that direct labor-hours would be a better base. The cost analyst has decided to try both bases and has assembled the following information: Tons Mined Direct Labor- Hours Quarter Year 1: First Second Third Fourth Year 2: First Second Third Fourth 34,000 21,000 39,000 31,000 6,900 4,900 5,900 7,900 Utilities Cost $ 69,000 $ 64,000 $ 79,000 $ 94,000 37,000 44,000 49,000 47,000 13,800 14,700 11,800 14,800 $ 119,000 $ 124,000 $ 104,000 $ 139,000 3. Would you recommend that the company use tons mined or direct labor-hours as a base for planning utilities cost? Tons mined Direct labor-hours
