The management of Rutledge Corporation would like to better understand the behavior of the company's warranty costs. Those costs are listed below for a number of recent months: Product ReturnsWarranty CostMarch30 $3,648April37 $4,074May43 $4,460June41 $4,330July32 $3,756August48 $4,782September35 $3,932October33 $3,823 Management believes that warranty cost is a mixed cost that depends on the number of product returns. Required:Estimate the variable cost per product return and the fixed cost per month using the least-squares regression method.
What will be an ideal response?
The solution using Microsoft Excel functions is:
Variable cost per product return = Slope = $63.59
Fixed cost per month = Intercept = $1,724
The solution using the formulas in the text is:
n = 8
?X = 299
?Y = $32,805
?XY = $1,242,995
?X2 = 11,441
b = [n(?XY) ? (?X)(?Y))]/[n(?X2) ? (?X)2]
= [8($1,242,995) ? (299)($32,805))]/[8(11,441) ? (299)2]
= $63.59
a = [(?Y) ? b(?X)]/n
= [($32,805) ? $63.59(299)]/8
= $1,724
Any difference in the solutions is due to rounding errors when the formulas are used.
You might also like to view...
A purchases budget
a. does not reflect early payment discounts granted by vendors. b. is the same thing as a production budget. c. is needed only if a firm does not pay for its merchandise in the same period as it is purchased. d. is affected by a firm's inventory policy only if the firm purchases on credit.
Which of the following GLOBE cultural dimensions is defined as--the degree to which a collective encourages and rewards group members for performance improvement and excellence?
A. future orientation B. performance orientation C. assertiveness D. in-group collectivism
A corporate code of ethics should be enforceable and include penalties
Indicate whether the statement is true or false
Title VII of the Civil Rights Act of 1964:
a. is enforced by the FTC. b. applies to employers engaged in an industry affecting commerce and having 15 or more employees. c. has been displaced by the Civil Rights Act of 1991. d. forbids discrimination in the workplace involving hiring, promotion, and retention, but does not cover transfer and retirement discrimination.