Question
Susan Lewis, owner of a florist shop, is interested in predicting the cost of delivering floral ar- rangements. She collected monthly data on the number
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Susan Lewis, owner of a florist shop, is interested in predicting the cost of delivering floral ar- rangements. She collected monthly data on the number of deliveries and the total monthly de- livery cost (depreciation on the van, wages of the driver, and fuel) for the past year.
Month Number of Deliveries Delivery Cost
January 180 1,200
February 550 1,800
March 85 1,100
April 115 1,050
May 160 1,190
June 590 1,980
July 500 1,800
August 520 1,700
September 100 1,100
October 200 1,275
November 260 1,400
December 450 1,780
#1 How much is the fixed cost of labor per month?
#2 How much is the variable rate per delivery?
#3 What would the cost formula be to use to predict future delivery cost?
#4 Using that cost formula, calculate the budgeted cost for next month, assuming that 305 deliveries are expected.
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Contemporary Auditing Real Issues And Cases
Authors: Michael Chris Knapp
9th International Edition
1133187900, 978-1133187905
