Question
In: Accounting
SHATTA MOVEMENT Ltd produces a single product. The company’s directors want to explore new markets, and...
SHATTA MOVEMENT Ltd produces a single product. The company’s
directors want to explore new markets, and they require an accurate
analysis of the firm’s cost structure for both forecasting and
pricing purposes. An attempt to provide this analysis from the
aggregation of individual costs has produced a poor correspondence
between actual and predicted costs. You are an accountant employed
by SHATTA MOVEMENT Ltd, and you have been asked to provide a
statistical approach to the problem. The financial director has
given you the following data:
Period
July August September October 1November December
Output (units)
9,000 14,000 11,000 8,000 6,000 12,000
Average unit cost (GHS)
12.8
13
11.4 12 13 11.7
You obtain the following further information:
The costs from which the averages have been computed consist
of the firm’s entire costs for the relevant month.
Fixed costs can be assumed to be unaffected by seasonal
factors except for harmattan heating. In July and August a
supplementary heating system was employed; this cost GHS 10,000 per
month to operate.
Required:
Estimate SHATTA MOVEMENT Ltd.’s normal fixed and variable cost
of production using linear regression.
Solutions
Expert Solution
| Month | Units (a) | Avg Unit Cost (b) | Total Cost (a*b) | Heating System Cost | Total Cost excluding Heating cost | |
| July | 9000 | 12.8 | 1,15,200.00 | 10,000.00 | 1,05,200.00 | |
| August | 14000 | 13 | 1,82,000.00 | 10,000.00 | 1,72,000.00 | |
| September | 11000 | 11.4 | 1,25,400.00 | - | 1,25,400.00 | |
| October | 8000 | 12 | 96,000.00 | - | 96,000.00 | |
| November | 6000 | 13 | 78,000.00 | - | 78,000.00 | |
| December | 12000 | 11.7 | 1,40,400.00 | - | 1,40,400.00 | |
| Cost may be represented in the form of following equation: | ||||||
| y = a + bx where, | ||||||
| y = total cost | ||||||
| a = total fixed cost | ||||||
| b = variable cost per unit | ||||||
| x = units | ||||||
|
||||||
|
||||||
| Least-Square Regression Calculator | ||||||
| x | y | x2 | xy | |||
| 1 | 9000 | 1,05,200.00 | 8,10,00,000.00 | 94,68,00,000.00 | ||
| 2 | 14000 | 1,72,000.00 | 19,60,00,000.00 | 2,40,80,00,000.00 | ||
| 3 | 11000 | 1,25,400.00 | 12,10,00,000.00 | 1,37,94,00,000.00 | ||
| 4 | 8000 | 96,000.00 | 6,40,00,000.00 | 76,80,00,000.00 | ||
| 5 | 6000 | 78,000.00 | 3,60,00,000.00 | 46,80,00,000.00 | ||
| 6 | 12000 | 1,40,400.00 | 14,40,00,000.00 | 1,68,48,00,000.00 | ||
| Total | 60000 | 7,17,000.00 | 64,20,00,000.00 | 7,65,50,00,000.00 | ||
|
||||||
| 2,91,00,00,000.00 | ||||||
| 25,20,00,000.00 | ||||||
| 11.54761905 | ||||||
| Variable Cost per unit = 11.55 approx | ||||||
|
||||||
| 24,142.86 | ||||||
| 6 | ||||||
| 4,023.81 | ||||||
| Fixed cost exluding heating system = 4024 approx | ||||||
ekkarill92 answered 2 years agoRelated Solutions
SHATTA MOVEMENT Ltd produces a single product. The company’s directors want to explore new markets, and...
SHATTA MOVEMENT Ltd produces a single product.
The company’s directors want to explore new markets, and they
require an accurate analysis of the firm’s cost structure for both
forecasting and pricing purposes. An attempt to provide this
analysis from the aggregation of individual costs has produced a
poor correspondence between actual and predicted costs. You are an
accountant employed by SHATTA MOVEMENT Ltd, and
you have been asked to provide a statistical approach to the
problem. The financial director has...
Skies Ltd produces a single product. The company’s directors want to explore new markets, and they...
Skies Ltd produces a single product. The company’s directors
want to explore new markets, and they require an accurate analysis
of the firm’s cost structure for both forecasting and pricing
purposes. An attempt to provide this analysis from the aggregation
of individual costs has produced a poor correspondence between
actual and predicted costs. You are an accountant employed by Skies
Ltd, and you have been asked to provide a statistical approach to
the problem. The financial director has given you...
1. As a junior member of your company’s committee to explore new markets, you have received...
1. As a junior member of your company’s committee to explore new
markets, you have received a memo from the chairperson telling you
to be prepared at the next meeting to discuss key questions that
need to be addressed if the company decides to look further into
the possibility of marketing to the BOP segment. The ultimate goal
of this meeting will be to establish a set of general guidelines to
use in developing a market strategy for any one...
Question 15 ABC Ltd produces a single product with a single grade of labour. It sales...
Question 15
ABC Ltd produces a single product with a single grade of labour.
It sales budget and finished goods inventory budget for period 3
are as follows:
Sales
700 units
Opening stock of finished goods 50
units
Closing stock of finished
goods 70 units
The goods are inspected only when production work is completed,
and it is budgeted that 105 of finished work will be scrapped.
The standard direct labour hour required in producing the
product is 3 hours....
Question 15 ABC Ltd produces a single product with a single grade of labour. It sales...
Question 15
ABC Ltd produces a single product with a single grade of labour.
It sales budget and finished goods inventory budget for period 3
are as follows:
Sales
700 units
Opening stock of finished goods 50
units
Closing stock of finished
goods 70 units
The goods are inspected only when production work is completed,
and it is budgeted that 105 of finished work will be scrapped.
The standard direct labour hour required in producing the
product is 3 hours....
DCK (Pty) Ltd produces a single product. You were given the following information regarding the product:...
DCK (Pty) Ltd produces a single product. You were given the
following information regarding the product: Pula (per unit)
Selling price 60.00 Variable production costs 12.00 Variable
selling cost 4.00 Fixed production cost 40.00 Fixed selling cost
8.00 Budgeted production is 10,000 units.
Required: Determine the following: a. Breakeven point in units
b. Number of units to be sold if the company wants to
achieve a profit of P110,000. c. Breakeven point in Pula,
if the variable production cost and...
Falkirk Ltd. produces a single product, the Thingme. Last year it sold 100,000 units with the...
Falkirk Ltd. produces a single product, the Thingme. Last year
it sold 100,000 units with the following results: Sales $2,500,000
Variable Costs $1,000,000 Fixed costs $ 400,000 Operating income
before taxes. $ 1,100,000 In an effort to improve the quality of
its product, Falkirk is considering replacing one of its component
parts, which costs $2 per unit, with an improved component which
will cost $3 per unit. It will also have to purchase a new piece of
equipment in order...
The directors of Elite Ltd are due to consider the authorization of the company’s financial statements...
The directors of Elite Ltd are due to consider the authorization
of the company’s financial statements for issue for the year ended
31 December 2017 and the following events are revealed. As you are
the financial controller of Elite Ltd, discuss how you would
account for the following items in accordance with HKAS 37
Provisions, Contingent Liabilities and Contingent Assets. Justify
your answers
a Bills receivable of $2 million were discounted during the year
and are due for maturity on...
Task 1: Standard Costing & Variance Analysis Kita Ltd, produces a single product in one of...
Task 1: Standard Costing & Variance
Analysis
Kita Ltd, produces a single product in one of its factory. For
control and measurement purposes, a standard costing system was
recently introduced and is now in operation.
The standards set for the month of May were as
follows:
Production and sales
16,000 units
Selling price (per unit)
RM140
Materials:
Material
XX
6 kilos per unit at RM12.25 per kilo
Material
YY
3 kilos per unit at RM3.20 per kilo...
CVP Analysis (9pts): The Ood Sphere, Ltd. produces and sells a single product, gaming headsets, with...
CVP Analysis (9pts): The Ood Sphere, Ltd.
produces and sells a single product, gaming headsets, with the
following information:
Per unit:
Per month:
Selling price
$79.00
Variable manufacturing costs:
Direct Materials
$18.00
Direct Labor
$7.75
Variable Factory OH
$6.00
Fixed manufacturing costs (Fixed OH)
$28,350
Variable selling and administrative costs
$10.50
Fixed selling and administrative costs
$17,180
The company sells 1,500 units during the month ended February
28th.
(3pts) Prepare a contribution margin income
statement for February at the current sales...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Non-constant growth model: Do=$2.00 required return on equity= 5% g= 9% n=1,2 g=7% n=3,4 g=3% n=5...
- . Find all x ∈ Z143 such that x2Ξ 7 (mod 143). Please explain all steps...
- #Python: A palindrome is a sequence of characters that reads the same backwards as forwards. For...
- Explain an example in which a variable has two different addresses at different places in a...
- Hadley, a thirty-five-year-old physician, has worked at Princeton Plainsboro Hospital for six years. She recently received...
- QUESTION 1. For each of the following, state whether the occurrence of the variable x occurs...
- According to Mike Taft of RVK, the “Markets Group” is an important unit of the Federal...
ADVERTISEMENT