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Practice Problems 4

# Practice Problems 4 - Chapter 10 1 Antz Industries has...

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Chapter 10 1) Antz Industries has provided you with the following data for its material storeroom: Month Number of Shipments Storeroom Costs January 175 3,000 February 225 3,600 March 275 4,300 April 175 3,800 May 200 2,700 June 225 3,200 July 300 4,250 August 325 4,400 September 275 4,100 October 200 3,150 November 150 2,650 December 175 2,750 Required: a) Determine the cost equation using the high-low method. Highest : August 4,400 325 Lowest: November 2,650 150 Difference 1,750 175 Divide: 1,750 / 175 = \$ 10.00 per shipment Cost equation at highest level: \$4,400 = \$10 (325) + Fixed Costs \$4400 = \$3250 + Fixed Costs Solve: 1150 = Fixed Costs Cost equation at lowest level: \$2,650 = \$10 (150) + Fixed Costs \$2,650 = \$1500 + Fixed Costs Solve: 1150 = Fixed Costs Cost equation: \$1,150 = \$10 (number of shipments) b) Using Excel, prepare a scattergraph of the data points, using the vertical axis and number of shipments as the horizontal axis. Do any of the points appear to be outliers?

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0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 0 50 100 150 200 250 300 350 Number of Shipments Storeroom Costs Series1 Costs related to the month of April do not fit the general pattern of behavior in the data—they could be outliers. 2) The Saints Company wants to develop an estimate of its supplies costs. The controller has collected what he believes to be the relevant data for the past 12 months. It is In is professional judgment that the supplies cost should be closely related to the volume of the product produced; he has provided you with the following information: January 100 3,550 February 80 2,980 March 70 2,970 April 50 2,410 May 60 2,530 June 80 3,180 July 70 2,830 August 80 2,820 September 100 3,220 October 70 2,950 November 60 2,560 December 50 2,420 a) Prepare the regression summary output using Excel (follow the directions in the sample problems)
SUMMARY OUTPUT Regression Statistics Multiple R 0.9324129 R Square 0.8693939 Adjusted R Squa 0.8563333 Standard Error 132.26091 Observations 12 ANOVA df SS MS F Significance F Regression 1 1164437.19 1164437 66.5660935 9.909E.06 Residual 10 174929.4766 17492.9 Total 11 1339366.667 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 1445.8953 178.4756267 8.10136 1.05E-05 1048.2268 1843.5639 19.619835 2.404743773 8.1588 9.91E-06 14.261731 24.977939 b) Prepare a cost formula for the supplies cost using the regression summary output. The estimated cost formula using the regression output can be expressed as

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Practice Problems 4 - Chapter 10 1 Antz Industries has...

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