Exercise 2.29 (Part Level Submission) Following is cost data for the equipment maintenance department. This department charges other departments for the actual cost of materials and labour when making equipment repairs. The managers now want to develop a cost function that explains their overhead costs as a function of the number of service calls made each month. February $3,000 470 200 March $3,000 578 200 62 April $3,000 735 250 62 May $3,200 650 250 62 62 Salary-manager* Supplies Insurance** Electricity Property tax*** Repair manuals Total Service calls 600 80 90 $3,822 $3,940 $4,727 $4,252 140125 90 110 * Salaries of all department heads are increased annually in May. ** Insurance rates increased in April. *** Property taxes are paid in two equal installments in April and October. v (a) Estimate the department's cost function using analysis at the account level. (Round variable cost per unit to 2 decimal places, e.g. 15.25.) Cost function = $ + x Service calls Question 2 Using the cost function estimated in part (A), estimate the overhead cost for June if 135 service calls are expected Question 3 Calculate the average overhead cost per unit for the four-month period. Given this average cost, what is the estimated total cost for June? (Round answers to 2 decimal places, e.g. 15.25.) Exercise 2.29 (Part Level Submission) Following is cost data for the equipment maintenance department. This department charges other departments for the actual cost of materials and labour when making equipment repairs. The managers now want to develop a cost function that explains their overhead costs as a function of the number of service calls made each month. February $3,000 470 200 March $3,000 578 200 62 April $3,000 735 250 62 May $3,200 650 250 62 62 Salary-manager* Supplies Insurance** Electricity Property tax*** Repair manuals Total Service calls 600 80 90 $3,822 $3,940 $4,727 $4,252 140125 90 110 * Salaries of all department heads are increased annually in May. ** Insurance rates increased in April. *** Property taxes are paid in two equal installments in April and October. v (a) Estimate the department's cost function using analysis at the account level. (Round variable cost per unit to 2 decimal places, e.g. 15.25.) Cost function = $ + x Service calls Question 2 Using the cost function estimated in part (A), estimate the overhead cost for June if 135 service calls are expected Question 3 Calculate the average overhead cost per unit for the four-month period. Given this average cost, what is the estimated total cost for June? (Round answers to 2 decimal places, e.g. 15.25.)
