Harnock Company constructed the following cost formula for its monthly janitoria
ID: 2428041 • Letter: H
Question
Harnock Company constructed the following cost formula for its monthly janitorial cost.
Total monthly janitorial cost = $5,000 + ($.48 X units of output)
Required:
A. Identify the independent variable.
B. Identify the dependant variable.
C. Identify the intercept. If required, round your answer to two decimal places.
$
D. Identify the slope. If required, round your answer to two decimal places.
$
E. Compute the total janitorial cost if Harnock produces 10,000 units of output next year.
$
The cost accountant for Bolagio Company used an Excel spreadsheet program to run ordinary least squares regression analysis on a set of cost data for its utility cost. Bolagio's cost driver for utility cost is machine hours. The following results were produced.
Required:
A. Construct the cost formula for Bolagio's utility cost using the results from the method of least squares.
B. Using the formula computed in (A), what is the estimated cost of utilities for May assuming that Bolagio will incur 110,000 machine hours?
$
Explanation / Answer
ANS:
A.
units of output
B.
Total monthly janitorial cost
C.
$5,000
D.
0.48
E.
($5,000 ´ 12) + ($.48 ´ 10,000) = $64,800 (Total Yearly Janitorial Costs)
ANS:
A.
Total utility cost = $2,490 + ($4.89 ´ no. of machine hours)
B.
$540,390 = $2,490 + ($4.89 ´ 110,000)
A.
units of output
B.
Total monthly janitorial cost
C.
$5,000
D.
0.48
E.
($5,000 ´ 12) + ($.48 ´ 10,000) = $64,800 (Total Yearly Janitorial Costs)
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