1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Sauron [17]
3 years ago
11

Pettit Ice Cream Company produces various ice cream products for which demand is highly seasonal. The company sells more ice cre

am in warmer months and less in colder ones. Last year, the high point in production activity occurred in August when Pettit produced 50,000 gallons of ice cream at a total cost of $82,000. The low point in production activity occurred in February when the company produced 20,000 gallons of ice cream at a total cost of $46,000.
Required:
a. Use the high-low method to estimate the amount of fixed cost per month incurred by Pettit Ice Cream Company
b. Determine the total estimated monthly cost when 40,000 gallons of ice cream are produced.
c. What factors could cause the estimate determined in Requirement b to be inaccurate?
d. Explain how regression analysis could be used to improve accuracy. Your explanation should in- clude a discussion of the R2 statistic as well as the potential impact of multiple regression analysis.
Business
1 answer:
Rashid [163]3 years ago
3 0

Answer:

a) Fixed costs = $22,000

b) $70,000

c) The high low cost method is generally inaccurate because it only considers the extremes, the highest and lowest costs and activity levels. Generally costs are not linear, but they might follow a certain tendency. The advantages of the high low cost method is that it is fairly accurate when costs are stable, plus it is much simpler to calculate.

d) Assuming that costs follow a certain tendency, regression analysis is much more exact since it analyses the relationship between different data and different variables. When you analyze only 2 variables, a linear regression analysis will serve you. but if you need to analyse more than two variables, then you must use a multiple regression analysis.

The R² statistic basically measures how one variable's variance is affected by other variables. E.g. if R² is 0.75, then 75% of the variance of A will be explained by the variance of B.

Explanation:

variable cost using high low cost method = (highest activity cost - lowest activity cost) / (highest activity level - lowest activity level) = ($82,000 - $46,000) / (50,000 - 20,000) = $36,000 / 30,000 gallons of ice cream = $1.20 per gallon of ice cream

fixed costs = $82,000 - (50,000 x $1.20) = $22,000

40,000 gallons

$22,000 + (40,000 x $1.20) = $70,000

how regression analysis improves accuracy of high low cost method

You might be interested in
Jokan contributes a nondepreciable asset to the Mahali LLC in exchange for a one-fourth (25%) interest in the LLC's capital and
dimulka [17.4K]

Answer:

A$33,500

B. $100,500

Explanation:

A. Calculation to determine How much of the nonrecourse debt is allocated to Jokan

Nonrecourse debt allocated=($167,500-$100,500)/2

Nonrecourse debt allocated=$67,000/2

Nonrecourse debt allocated=$33,500

Therefore based on the information given the amount of the NONRECOURSE DEBT that is allocated to Jokan is 25% or $33,500

B. Calculation to determine the amount of Jokan's basis in the LLC interest following the contribution

Basis in the LLC interest=$33,500+($167,500-$100,500)

Basis in the LLC interest=$33,500+$67,000

Basis in the LLC interest=$100,500

Therefore the amount of Jokan's basis in the LLC interest following the contribution is $100,500

4 0
3 years ago
The _________________ is a resource that provides information on a wide variety of occupations, which also includes information
levacccp [35]
The lovely world of Internet. C:
4 0
3 years ago
Read 2 more answers
List and describe the four basic rights in the private enterprise system
Elodia [21]

Private property

competition

profits

and freedom of choice


8 0
3 years ago
Read 2 more answers
A manager hires an agent to obtain a license to build a warehouse in an industrial district. The agent gets caught offering a br
Rus_ich [418]

Answer: The correct answer is D:)

6 0
3 years ago
Construction workers manufacturing workers and farmers have what in common?
Marina86 [1]

Answer: There career pathways

Explanation:

7 0
3 years ago
Other questions:
  • A graphical representation of all organizational jobs along with the numbers of employees currently occupying those jobs and fut
    5·1 answer
  • Jonamser Bank has separate legal, marketing, finance, and human resources divisions. Each of these units has qualified specialis
    8·1 answer
  • Carla will graduate from her business program next month. She is happiest in jobs where she doesn’t know what will be waiting fo
    8·1 answer
  • Employees working in the petroleum industry in Alaska might be receiving higher wages based on the fact that their careers requi
    9·2 answers
  • Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $380 million on July 1, 2018, at a price of $370
    5·1 answer
  • In measuring return-on-investment (ROI) from sport sponsorships, companies have used all of the following methods except A. peri
    8·1 answer
  • Suppose Best Buy is the only electronics store in a particular​ market, but RadioShack is thinking about entering the market. Be
    14·1 answer
  • Explain sustainable eco-friendly​
    6·2 answers
  • Who controls the flow of information in the business process
    10·1 answer
  • which of these line items appears on both the statement of stockholders' equity and the balance sheet?
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!