# Accounts - Chapter 4 Sabina and Associates has the...

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Chapter 4 Sabina and Associates has the following current year costs: Variable costs \$4 per unit Fixed costs \$20,000 Next year, the company plans to enter into an arrangement with a supplier that will result in a  15% decrease in variable costs. They also plan on reducing their rental space, which will  decrease fixed costs by 10%. Required : A . What will be the new equation to predict total costs? The equation will link variable and fixed costs. The new variable cost per  unit = 4 X .85 = 3.4. New fixed cost = 20,000 X .9 = 18,000 The cost equation would be Total cost = 18,000+ 3.4 X number of units B . If next year's production is expected to be 10,000 units, what will be total  estimated costs? For 10,000 units Estimated cost = 18,000 + 3.4 X 10,000 = \$52,000 Problem 2: You run a regression analysis and receive the following results: Multiple R .39429 R Square .15547 Adjusted R Square .14964 Standard Error .44416 Analysis of Variance DF Sum of Squares Mean Square Regression     1   5.26588 5.26588 Residual 145 28.60536   .19728

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F = 26.69262 Signif F = .0000 Variables in the Equation Variable Coefficients Standard error t Stat P-value X Variable 1     11.0300 .021000 5.166 .0000 Intercept 8833.0700 .090000 9.751 .0000 Required : A . What is the fixed cost in this regression analysis? The intercept is the fixed cost = 8,833 B . What is the variable cost per unit? The X variable is the variable cost = 11.03 per unit C . Prepare the cost equation based upon these results.
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Accounts - Chapter 4 Sabina and Associates has the...

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