The Mac Davis Company specializes in the purchase, renovation, and resale of older homes. Mac employs several
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Mac has been using the home's interior square feet for his exterior paint cost estimations. Recently he decided to include the number of openings-the total number of doors and windows in a house- as a cost driver. Their cost is significant because they require time-consuming preparatory work and careful brushwork. The rest of the house usually is painted either by rollers or spray guns, which are relatively efficient ways to apply paint to a large area. Mac has kept careful records of these expenses on his last 12 jobs:
Required
1. Using the high-low cost estimation technique, determine the cost of painting a 3,300-square-foot house with 14 openings. Also determine the cost for a 2,400-square-foot house with 8 openings.
2. Plot the cost data against square feet and against openings. Which variable is a better cost driver? Why?
3. Calculate a multiple regression model for predicting cost based on openings and square feet. Comment on the statistical reliability and precision of this model.
4. What are the sustainability issues for this company, and what is the role of cost estimation in this regard?
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Related Book For
Cost Management A Strategic Emphasis
ISBN: 1081
6th Edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins
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