Cost Accounting

Your company provides a variety of delivery services. Management wants to know the volume of a particular delivery that would generate $10,500 per month in operating profits before taxes. The company charges $20 per delivery.

The controller’s office has estimated overhead costs at $9,000 per month for fixed costs and $12 per delivery for variable costs. You believe that the company should use regression analysis. Your analysis shows the results to be:

Monthly overhead = $23,617 + $10.72 per delivery

Your estimate was based on the following data:

Month    Overhead Costs    Number of Deliveries
1    $142,610    11,680
2    151,850    12,430
3    192,660    15,910
4    141,160    11,500
5    203,990    13,030
6    180,540    14,980
7    159,530    12,760
8    183,970    15,310
9    194,580    15,700
10    150,220    12,220
11    154,240    12,880
12    185,150    15,550
13    183,160    14,830

The company controller is somewhat surprised that the cost estimates are so different. You have been asked to recheck your work and see if you can figure out the difference between your results and the controller’s results.

a. Perform a regression analysis in Excel to determine the regression coefficients for the data. (Round your final answers to 2 decimal places.)

b. Change the question to “Determine the amount of deliveries needed to earn operating profits of $10,500. (Round your intermediate calculations 2 decimal places. Roundup “unit” answer to the nearest whole number.)

 

 

PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A GOOD DISCOUNT