A firm has a fixed cost of $100 and average variable cost of $5xq, where q is the number of units produced.

a. Construct a table showing total cost for q from 0 to 10.

b. Graph the firms marginal cost and average total cost curves.

c. How does marginal cost change with q? What does this suggest about the firm’s production process?

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.

Open spreadsheet

1. Compute b₁ and b₀ (to 1 decimal).

   b₁

   b₀

   Complete the estimated regression equation (to 1 decimal).

   =  + x

2. According to this model, what is the change in cost (in dollars) for every unit produced (to 1 decimal)?

3. 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)?

   %

4. 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)?

   $

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.

Open spreadsheet

1. Compute b₁ and b₀ (to 1 decimal).

   b₁

   b₀

   Complete the estimated regression equation (to 1 decimal).

   =  + x

2. According to this model, what is the change in cost (in dollars) for every unit produced (to 1 decimal)?

3. 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)?

   %

4. 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

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.

1. Compute b₁ and b₀ (to 1 decimal).

   b₁

   b₀

   Complete the estimated regression equation (to 1 decimal).

   =  + x

2. According to this model, what is the change in cost (in dollars) for every unit produced (to 1 decimal)?

3. 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)?

   %

4. 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)?

   $

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.

1. Compute b₁ and b₀ (to 1 decimal).

   b₁

   b₀

   Complete the estimated regression equation (to 1 decimal).

   =  + x

2. According to this model, what is the change in cost (in dollars) for every unit produced (to 1 decimal)?

3. 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)?

   %

4. 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)?

   $

1. Mixed Costs and Cost Formula

   Callie's Gym is a complete fitness center. Owner Callie Ducain employs various fitness trainers who are expected to staff the front desk and to teach fitness classes. While on the front desk, trainers answer the phone, handle walk-ins and show them around the gym, answer member questions about the weight machines, and do light cleaning (wiping down the equipment, vacuuming the floor). The trainers also teach fitness classes (e.g., pilates, spinning, body pump) according to their own interest and training level. The cost of the fitness trainers is $600 per month and $20 per class taught. Last month, 100 classes were taught.

   Required:

   1. Develop a cost equation for total cost of labor.

   Total labor cost

   =

   $

   +

   $ per class taught

   2.	What was total variable labor cost last month?
   	$

   3.	What was total labor cost last month?
   	$

   4.	What was the unit cost of labor (per class) for last month?
   	$ per class

   5.	What if Callie increased the number of classes offered by 50 percent?

   a.	What would be the total labor cost?
   	$
   b.	The unit labor cost?
   	$
   c.	Explain why the unit labor cost decreased.

If total assets equal $346000 and total stockholders' equity equal $140400, then total liabilities must equal

a) $205600

b) $140400

c) There is not enough information given to determine this

d) $486400

Note: Assume that both Devon and Ravi can produce any corresponding linear combination of milk and ice cream.

Consider Devon’s production of milk and ice cream

1. What is Devon’s opportunity cost of producing a pint of ice cream?
2. What is Devon’s opportunity cost of producing a pint of milk?
3. What is Ravi’ opportunity cost of producing a pint of ice cream?
4. What is Ravi’ opportunity cost of producing a pint of milk?
5. Who has the absolute advantage in the production of milk?
6. Who has the absolute advantage in the production of ice cream?
7. Who has the comparative advantage in the production of milk?
8. Who has the comparative advantage in the production of ice cream? (Please provide a brief explanation.)
9. If both want to consume a strictly positive amount of both milk and ice cream: Who will trade milk for ice cream? (i.e. Who will give up milk in exchange for ice cream?)
10. If both want to consume a strictly positive amount of both milk and ice cream: Who will trade ice cream for milk? (i.e. Who will give up ice cream in exchange for milk?)
11. How much milk and ice cream will be produced if both Ravi and Devon completely specialize in the production of the product in which he has a comparative advantage?