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20171011235720qm 3

Content type
User Generated
Subject
Statistics
Type
Homework
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1. The management of Wheeler Company has decided to develop cost formulas for its
major overhead activities. Wheeler uses a highly automated manufacturing process,
and power costs are a significant manufacturing cost. They have debated whether the
power cost should be treated as fixed, variable, or both. Using the following data you
are charged to settle this issue and determine the best cost formula for Wheeler.
Quarter
Machine Hrs.
Power Cost
1
20000
26000
2
25000
38000
3
30000
42500
4
22000
37000
5
21000
34000
6
18000
29000
7
24000
36000
8
28000
40000
a. Find the estimated fixed cost associated with the machine hours.
b. Find the estimated variable cost associated with the machine hours.
c. Discuss your confidence in the use of these estimates.
d. Would you recommend using this cost function? Explain.
2. You are asked to predict orders for the next two periods. You have information
available for the overtime hours used for each month.
Month
Orders
Overtime

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1
53
22
2
56
23
3
61
25
4
63
31
5
67
21
6
74
22
7
73
20
8
77
29
9
84
23
10
87
12
11
88
22
12
94
26
13
92
16
14
99
17
a. Find the best method to predict orders.
b. Discuss the model fit.
c. Predict the orders for the next two periods.
d. Would you recommend using this model? Explain.
3. The data below are weekly figures from Herbert Hooley’s Happy House (except for
the quarterly error figures). They sell radios, TVs, and VCRs in their electronics
department. He needs you to help him with a few things, which he will indicate to
you.

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1. The management of Wheeler Company has decided to develop cost formulas for its major overhead activities. Wheeler uses a highly automated manufacturing process, and power costs are a significant manufacturing cost. They have debated whether the power cost should be treated as fixed, variable, or both. Using the following data you are charged to settle this issue and determine the best cost formula for Wheeler. Quarter Machine Hrs. Power Cost 1 20000 26000 2 25000 38000 3 30000 42500 4 22000 37000 5 21000 34000 6 18000 29000 7 24000 36000 8 28000 40000 a. Find the estimated fixed cost associated with the machine hours. b. Find the estimated variable cost associated with the machine hours. c. Discuss your confidence in the use of these estimates. d. Would you recommend using this cost function? Explain. 2. You are asked to predict orders for the next two periods. You have information available for the overtime hours used for each month. Month Orders Overtime 1 2 3 4 5 6 7 8 9 10 11 12 13 14 53 56 61 63 67 74 73 77 84 87 88 94 92 99 22 23 25 31 21 22 20 29 23 12 22 26 16 17 a. Find the best method to predict orders. b. Discuss the model fit. c. P ...
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