Garvin Corporation manufactures a children's bicycle, model CT8. Garvin currently manufactures the bicycle frame. During 2023, Garvin made 37,000 frames at a total cost of $1,110,000. Ryan Corporation has offered to supply as many frames as Garvin wants at a cost of $28.50 per frame. Garvin anticipates needing 41,000 frames each year for the next few years. Required Requirement 1. (a) What is the average cost of manufacturing a bicycle frame in 2023? How does it compare to Ryan's offer? The average cost of $ per frame is than Ryan's offer. (b) Can Garvin use the answer in requirement 1a to determine the cost of manufacturing 41,000 bicycle frames? Explain. Garvin take the average manufacturing cost in 2023 to determine the total cost of manufacturing 41,000 bicycle frames. The reason is that Requirement 2. Garvin's cost analyst uses annual data from past years to estimate the following regression equation with total manufacturing costs of the bicycle frame as the dependent variable and bicycle frames produced as the independent variable: y=$430,000+$18x Garvin Corporation manufactures a children's bicycle, model CT8. Garvin currently manufactures the bicycle frame. During 2023 , Garvin made 37,000 frames at a tota cost of $1,110,000. Ryan Corporation has offered to supply as many frames as Garvin wants at a cost of $28.50 per frame. Garvin anticipates needing 41,000 frames each year for the next few years. Required y=$430,000+$18X During the years used to estimate the regression equation, the production of bicycle frames varied from 36,000 to 41,000 . Using this equation, estimate how much it would cost Garvin to manufacture 41,000 bicycle frames. How much more or less costly is it to manufacture the frames rather than to acquire them from Ryan? Estimated cost to make the frames $ Cost to purchase the frames t will cost \$ to purchase the frames rather than manufacture them in-house. Requirement 3. What other information would you need to be confident that the equation in requirement 2 accurately predicts the cost of manufacturing bicycle rames? Garvin would need to consider several factors before being confident that the equation in requirement 2 accurately predicts the cost of manufacturing bicycle Requirement 3 . What other information would you need to be confident that the equation in requirement 2 accurately predicts the cost of manufacturing bicycle frames? Garvin would need to consider several factors before being confident that the equation in requirement 2 accurately predicts the cost of manufacturing bicycle frames. (Leave any unused cells blank.)
