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ut on the Water, Inc. is a manufacturer of kayaks. Management would like to make a rough estimate of its product costs for the upcoming period because it's slated to be the most productive period for the company yet. The following production data was compiled from the previous year: Production level in kayaks January 210 February 120 March 132 April 144 May 180 June 192 July 240 August 180 September 180 October 168 November 246 December 234 Month Product costs per kayak $133.72 $185.00 $200.00 $187.10 $152.67 $145.90 $120.50 $152.00 $153.30 $162.10 $136.60 $127.90

ut on the Water, Inc. is a manufacturer of kayaks. Management would like to make a rough estimate of its product costs for the upcoming period because it's slated to be the most productive period for the company yet. The following production data was compiled from the previous year: Production level in kayaks January 210 February 120 March 132 April 144 May 180 June 192 July 240 August 180 September 180 October 168 November 246 December 234 Month Product costs per kayak $133.72 $185.00 $200.00 $187.10 $152.67 $145.90 $120.50 $152.00 $153.30 $162.10 $136.60 $127.90

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Out on the Water, Inc. is a manufacturer of kayaks. Management would like to make a rough estimate of its product costs for the upcoming period because it's slated to be the most productive period for the company yet. The following production data was compiled from the previous year: Production level in kayaks January 210 February 120 March 132 April 144 May 180 June 192 July 240 August 180 September 180 October 168 November 246 December 234 Month Product costs per kayak $133.72 $185.00 $200.00 $187.10 $152.67 $145.90 $120.50 $152.00 $153.30 $162.10 $136.60 $127.90

Out on the Water, Inc. is a manufacturer of kayaks. Management would like to make a rough estimate of its product costs for the upcoming period because it's slated to be the most productive period for the company yet. The following production data was compiled from the previous year: Production Product level in costs per kayaks kayak 210 $133.72 120 $185.00 132 $200.00 April 144 $187.10 May 180 $152.67 June 192 $145.90 July 240 $120.50 August 180 $152.00 September 180 $153.30 October 168 $162.10 November 246 $136.60 December 234 $127.90 Month January February March
Transcribed Image Text:Out on the Water, Inc. is a manufacturer of kayaks. Management would like to make a rough estimate of its product costs for the upcoming period because it's slated to be the most productive period for the company yet. The following production data was compiled from the previous year: Production Product level in costs per kayaks kayak 210 $133.72 120 $185.00 132 $200.00 April 144 $187.10 May 180 $152.67 June 192 $145.90 July 240 $120.50 August 180 $152.00 September 180 $153.30 October 168 $162.10 November 246 $136.60 December 234 $127.90 Month January February March
Using a scatterplot, it was determined that November represented a potential outlier. After talking with the production manager, it was determined that the November data point represented an anomaly and should be removed from the data set before continuing with the cost analysis. The relevant range extends to 3,000 kayaks per year. Using the high low method, which of the following statements is incorrect? The annual fixed costs are expected to be $170,280. If 200 kayaks are expected to be produced in a given month, the total estimated costs would be $26,680. For each additional kayak manufactured, product costs are expected to increase by $56.00. Monthly fixed costs would be $15,480 even with a change in the production level. If 2,000 kayaks are expected to be produced in a given year, the estimated total variable costs would be $112,000.
Transcribed Image Text:Using a scatterplot, it was determined that November represented a potential outlier. After talking with the production manager, it was determined that the November data point represented an anomaly and should be removed from the data set before continuing with the cost analysis. The relevant range extends to 3,000 kayaks per year. Using the high low method, which of the following statements is incorrect? The annual fixed costs are expected to be $170,280. If 200 kayaks are expected to be produced in a given month, the total estimated costs would be $26,680. For each additional kayak manufactured, product costs are expected to increase by $56.00. Monthly fixed costs would be $15,480 even with a change in the production level. If 2,000 kayaks are expected to be produced in a given year, the estimated total variable costs would be $112,000.
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