{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

acct 6 answer - (10-15 min E 6-21 The month with the...

Info icon This preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
(10-15 min.) E 6-21 The month with the highest volume is February and the month with the lowest volume is July. The high-low method uses only these two months to determine the cost equation. Step 1) Find the slope: Rise = y (high) y (low) = ($5,748 $5,020) = 0.26 per mile Run x (high) x (low) (17,300 14,500) miles Step 2) Find the vertical intercept (the fixed cost component) by plugging the slope into a cost equation, using either the February or May data. Using February data: y = vx + f $5,748 = ($0.26 per mile × 17,300 miles) + f f = $1,250 Or, Using July data: y = vx + f $5,020 = ($0.26 per mile × 14,500 miles) + f f = $1,250 Step 3) Write the cost equation: y = $0.26 x + $1,250 where y = monthly van operating costs x = number of miles driven
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Predict monthly operating costs when volume is 15,000 miles y = ($0.26 × 15,000) + $1,250 y = $5,150
Image of page 2
(15-20 min.) E 6-22 Req. 1 Student graphs may vary slightly. For example, some students may force the origin to show on the graph by setting the minimum x and y axis values to zero. The graph title and axes titles may also vary from that shown. Van Operating Costs 14,000 14,500 15,000 15,500 16,000 16,500 17,000 17,500 4800 5000 5200 5400 5600 5800 6000 Miles Driven Cost
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
(continued) E 6-22 Req. 2 The Excel regression output looks like this: SUMMARY OUTPUT Regression Statistics Multiple R 0.949707 R Square 0.901943 Adjusted R Square 0.882332 Standard Error 115.3003 Observations 7 ANOVA df SS MS F Significanc e F Regression 1 611411.1 611411.1 45.99092 0.00106 Residual 5 66470.85 13294.17 Total 6 677882 Coefficient s Standard Error T Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept 802.3909 677.7279 1.183943 0.289648 -939.761 - 2544.543 -939.761 - 2544.543 X Variable 0.290029 0.042767 6.781661 0.00106 0.180094 0.399965 0.180094 0.399965 Req. 3 Based on the Excel output, Flower Power’s van operating cost equation is: y = $0.29 x + $802.39 where y = monthly van operating costs x = miles driven
Image of page 4
This equation found by looking at the “X variable 1 coefficient” (.290029) and the “intercept coefficient” (802.3909) on the Excel output.
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
(continued) E 6-22 Req. 4 The R-square is .901 (rounded). The r-square indicates that the cost equation explains 90.1% of the variability in the data. In other words, it fits the data quite well. Flower
Image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern