Production Volume (units) Total Cost ($) 400 4900 450 5900 550 6300 600 6800 700 7300...

Production Volume (units)	Total Cost ($)
400	4900
450	5900
550	6300
600	6800
700	7300
750	7900

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.

In the Microsoft Excel Online file below you will find a sample of production volumes and total cost data for a manufacturing operation. Conduct a regression analysis to explore the relationship between total cost and production volume and then answer the questions that follow.

Compute b₁ and b₀ (to 1 decimal).

b₁

b₀

Complete the estimated regression equation (to 1 decimal).

= + x
According to this model, what is the change in cost (in dollars) for every unit produced (to 1 decimal)?
Compute the coefficient of determination (to 3 decimals). Note: report r² between 0 and 1.

r² =

What percentage of the variation in total cost can be explained by the production volume (to 1 decimal)?

%
The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation (to the nearest whole number)?

$

Expert Solution

a. b1 = 7.6

b0 = 2146.7

b. 7.6

c. r^2 = 0.979^2 = 0.958

95.8%

d. 5947

orchestra answered 2 years ago

Production volume 400 450 550 600 700 750 Total cost 4000 5000 5400 5900 6400 7000...

Production volume 400 450 550 600 700 750 Total cost 4000 5000 5400 5900 6400 7000 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....

Its total output (income) is $4900. Domestic consumption is $2300; total domestic government purchases are $600

Its total output (income) is $4900. Domestic consumption is $2300; total domestic government purchases are $600; and domestic economic investment totals $1700. The nation exports $400 and imports $100. 1) Find this nation's national savings. 2) Consider again the economy from the previous question. This economy runs a trade _______ and is a net ___________ other nations. a. deficit; lender to b. surplus; borrower from c. surplus; lender to d. deficit; borrower from

1. Month Total Maintenance Cost Production Volume (units) January $ 1,980 1,850 units February $ 1,800...

1. Month Total Maintenance Cost Production Volume (units) January $ 1,980 1,850 units February $ 1,800 1,500 units March $ 2,200 2,600 units April $ 2,180 2,275 units May $ 2,300 2,750 units Using the high-low method, the variable rate for maintenance is: Multiple Choice $0.40. $0.75. $1.50. $2.00. 2. The current cost structure for the production department of Performance, Inc., has fixed expenses of $500,000 and variable expenses of $200 per unit. Unit sales volume is 6,000 units. Performance,...

PRODUCTION UNITS 100 END INV UNITS 20 TOTAL PRODUCTION COST 20000 EUROS TOTAL FIXED MOH 1000...

PRODUCTION UNITS 100 END INV UNITS 20 TOTAL PRODUCTION COST 20000 EUROS TOTAL FIXED MOH 1000 EUROS a. Data is missing b. Full Costing OPINC 200 EUROS higher than VC OPINC C. Full Costing OPINC =VC OPINC d. Full Costing OPINC 200 euros lower than VC OPINC

A firm is producing 1,000 units of a good and the total cost of production is...

A firm is producing 1,000 units of a good and the total cost of production is $4 million. $1 million in costs go to fixed factors like buildings, insurances, and operating licenses. The remaining $3 million goes to workers and suppliers. a) Using the numbers provided, calculate the average total cost, the average fixed cost, and the average variable cost? b) Explain what is meant by marginal cost? c) If the marginal cost for the firm of producing 1,000 units...

What is the product cost for Job 23 which consists of 400 units and total manufacturing...

What is the product cost for Job 23 which consists of 400 units and total manufacturing costs of direct materials $3,200, direct labor $6,400, and overhead of $2,800? Prepare a cost of goods manufactured and cost of goods sold section of the income statement

Cost behavior. VW has determined the following cost information at a volume of 16,000 units: Total...

Cost behavior. VW has determined the following cost information at a volume of 16,000 units: Total variable expenses = $108,000 and average cost = $13.00. Assuming 40,000 units is within the relevant, compute TOTAL cost at a volume of 40,000 units.

Diesel: At an activity volume of 60,000 units per year, the unit cost of production of...

Diesel: At an activity volume of 60,000 units per year, the unit cost of production of this part is calculated as follows: By Unit Total Raw Materials $4 Direct Labor $2.75 Variable indirect manufacturing costs $0.50 Specific manufacturing indirect costs $3 $180000 Common fixed manufacturing indirect costs $2.25 $135000 Unit cost for product $12.50 An outside supplier offered to sell Carthage Inc. this electrical component at only $ 10 per unit. One-third of the specific fixed manufacturing overhead is made...

3. If production volume increases from 8000 to 10 000 units, a. total costs will increase...

3. If production volume increases from 8000 to 10 000 units, a. total costs will increase by 20 per cent. b. total costs will increase by 25 per cent. c. total variable costs will increase by 25 per cent. d. mixed and variable costs will increase by 25 per cent.4. The direct material cost is £10 000 when 2000 units are produced. What is the direct material cost for 2500 units produced? a. £10 000 b. £8000 c. £15 000 d. £12 500 5. Fixed cost...

The following are the total cost for differing amounts of units of hammers. Units Total Cost...

The following are the total cost for differing amounts of units of hammers. Units Total Cost 26,200 $975,000 44,100 $1,456,400 18,700 $770,600 27,600 $1,011,100 34,400 $1,197,700 What is the variable cost per unit? Using your answer in the above question, estimate the total cost for 25,000 hammers.

Question