Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 6.A, Problem 5E
George Caloz&Freres, located in Grenchen, Switzerland, makes luxury custom watches in small lots. One of the company’s products, a platinmn diving watch. Goes through an etching process. The company has recorded etching costs as follows over the last six weeks:
For planning purposes, management would like to know the variable etching cost per unit and the total fixed etching cost per week.
Required:
1. Prepare a scattergraph plot. (PIot etching costs on the vertical axis and units on the horizontal axis)
2. Using the least-squares regression method estimate the variable etching cost per unit and the total fixed etching cost per week, Express these estimates in the form Y= a + bX.
3. If the company processes five units next week, what would be the expected total etching cost? (Round your answer to the nearest cent.)
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George Caloz & Frères, located in Grenchen, Switzerland, makes luxury custom watches in small lots. One of the company’s products, a platinum diving watch, goes through an etching process. The company has recorded etching costs as follows over the last six weeks:
Week
Units
Total Etching Cost
1
13
$
24
2
11
21
3
16
31
4
15
25
5
18
31
6
18
32
91
$
164
For planning purposes, management would like to know the variable etching cost per unit and the total fixed etching cost per week.
3. If the company processes twenty units next week, what would be the expected total etching cost? (Round your intermediate calculations and final answer to 2 decimal places.)
George Caloz & Frères, located in Grenchen, Switzerland, makes luxury custom watches in small lots. One of the
company's products, a platinum diving watch, goes through an etching process. The company has recorded etching costs
as follows over the last six weeks:
Week
1
ASAWNE
2
3
4
5
Units
12
3
8
8
8
11
50
Total Etching
Cost
$ 32
20
26
27
25
30
$ 160
For planning purposes, management would like to know the variable etching cost per unit and the total fixed etching cost
per week.
Exercise 5A-5 Part 3 (Algo)
3. If the company processes fourteen units next week, what would be the expected total etching cost? (Round your intermediate
calculations and final answer to 2 decimal places.)
Expected total etching cost
George Caloz & Frères, located in Grenchen, Switzerland, makes luxury custom watches in small lots. One of the company’s products, a platinum diving watch, goes through an etching process. The company has recorded etching costs as follows over the last six weeks:
Week
Units
Total Etching Cost
1
13
$
24
2
11
21
3
16
31
4
15
25
5
18
31
6
18
32
91
$
164
For planning purposes, management would like to know the variable etching cost per unit and the total fixed etching cost per week.
2-a. Using the least-squares regression method, estimate the variable etching cost per unit and the total fixed etching cost per week.
2-b. Express these estimates in the form Y = a + bX.
Chapter 6 Solutions
Introduction To Managerial Accounting
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