Question
Total production cost each week in a production department have been measured for the past five weeks as follows: Week Units Produced Total Cost (GH)
Total production cost each week in a production department have been measured for the past five weeks as follows:
Week | Units Produced | Total Cost (GH₵) |
1 | 5 | 20000 |
2 | 9 | 27000 |
3 | 4 | 17000 |
4 | 5 | 19000 |
5 | 6 | 23000 |
Required:
a. Use linear regression analysis to obtain an estimate of the fixed cost per week and the variable cost of production per unit. (4 marks)
b. Use your results to estimate the total cost in a week when 8 units are produced. (2 marks)
c. Calculate the correlation coefficient and comment on the value of r that you have obtained. (2marks)
d. Estimate a value for fixed costs and variable costs from the same data, using the high/low analysis and use the values that you have obtained to estimate the total costs in a week when 8 units are produced.
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Intermediate Accounting
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
10th Edition
324300980, 978-0324300987
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