Which of the following statements related to cost estimation methods is false? a. The three methods determine a slope and an intercept. O b. The most complex method of cost estimation is the high-low method. O c. None of the given answers. O d. The least-squares regression method is the most accurate and reliable method to d compared to scatter-graph plot and high-low methods.
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- I need an explanation for part b) of the following questions. Scatter Diagrams and High-Low Cost EstimationFrom April 1 through October 31, Will County Highway Department hires temporary employees to mow and clean the right-of-way along county roads. The County Road Commissioner has asked you to help her in determining the variable labor cost of mowing and cleaning a mile of road. The following information is available regarding current-year operations: Month Miles Mowedand Cleaned LaborCosts April 350 $12,000 May 300 11,250 June 400 13,500 July 250 8,250 August 375 12,750 September 200 7,500 October 100 7,200 Use the information from the high- and low-volume months to develop a cost-estimating equation for monthly labor costs. Monthly labor costs = Answer + Answer X Plot the data on a scatter diagram. Using the information from representative high- and low volume months, use the high-low method to develop a cost-estimating equation for monthly…a) Determine the variable cost per unit and the fixed cost using the high-low method.b) What is the equation of the total mixed cost function?c) Prepare the scatter diagram and insert the trendline or line of best-fit. Use a scaleof 2 cm to represent 1,000 units on the x-axis & 2 cm to represent $50,000 on the yaxis.3-32 ** High-low method, regression analysis OBJECTIVES 4, 5 Rockhampton College has recently opened a restaurant as part of its hospitality major. For the first 10 weeks the manager did not estimate any costs but instead hoped revenues would cover costs. One of the new waiters, who happens to be taking a cost accounting class, suggests that the manager take the past known weekly costs and try to determine a cost equation by relating the cost to the number of customers served. The cost and customer data are as follows: Week Number of customers per week Weekly total costs of restaurant 751 $16800 745 16597 3 810 17 800 4 833 18 600 825 876 17900 19600 7 855 18900 8. 897 18500 925 20305 10 910 20000 The manager gives this information to the waiter, who runs a regression and gets the following equation: Weekly total restaurant costs = $2453 + ($19.04 × Number of customers per week) Required 1 Plot the relationship between number of customers per week and weekly total restaurant costs. 2…
- Exercise Q4: A company charged RM70 to move a machine at a distance of 15km. While RM100 is imposed if the distance increased to 25km. (a) Produce linear cost equation for moving the machine. (b) Calculate the fixed cost, variable costs and total cost for 50km distance.1. Determine the variable cost per unit and the fixed cost using the high-low method.2. What is the equation of the total mixed cost function?3. Prepare the scatter diagram, clearly showing any outliers.4. Using the line of best-fit, determine the company’s fixed cost per month and the variable cost per unit. (Use 0 & 5,000 units.)5. In view of the department’s cost behaviour pattern, which of the two methods appear more appropriate? Explain your answer.Break-Even Analysis The table below contains price-demand and total cost data for the production of treadmills, where p is the wholesale price (in dollars) of a treadmill for an annual demand of a treadmills, and C is the total cost (in dollars) of producing a treadmills. X 2,910 3,415 4,645 5,330 P ($) 1,450 1,275 1,123 918 C ($) 3,634,000 3,782,000 4,185,000 4,290,000 Use this data to find a linear regression equation for price-demand data, using as the independent variable: P = ax + b, where a is rounded to 1 decimal place and b is rounded to the nearest integer. Use this data to find a linear regression model for the cost data, using a as the independent variable: C(x) = cx + d, where c is rounded to the nearest integer and d is rounded to the nearest 10,000. Use these linear regression models to answer questions 11-14 below.
- An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation. Production Volume (units) Total Cost ($) 400 4,000 450 5,000 550 5,400 600 5,900 700 6,400 750 7,000 a. Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume. Do not round intermediate calculations. Compute b1 and bo (to 1 decimal). bị bo Complete the estimated regression equation (to 1 decimal). Do not round intermediate calculations b. What is the variable cost per unit produced (to 2 decimal)? Do not round intermediate calculations 2$ c. Compute the coefficient of determination (to 3…1. Exercise 9.1 A study of 86 savings and loan associations in six northwestern states yielded the following cost function. 2.38 0.006153Q 0.000005359Q² 19.2X1 C + + (2.62) (2.84) (3.16) (3.50) where C = average operating expense ratio, expressed as a percentage and defined as total operating expense ($ million) divided by total assets ($ million) times 100 percent. Q = output; measured by total assets ($ million) X1 = ratio of the number of branches to total assets ($ million) Note: The number in parentheses below each coefficient is its respective t-statistic. Which of the variable(s) is (are) statistically significant in explaining variations in the average operating expense ratio? (Hint: t0.025,7€ 1.99 .) Check all that apply. X1 Q2 What type of average cost-output relationship is suggested by these statistical results? Quadratic Linear Cubic Based on these results, what can we conclude about the existence of economies or diseconomies of scale in savings and loan associations in…II. Find The Minimum Cost and graph : 1. C = x2 - 16x + 74 2. C = x2 - 40x + 405 Thank you.