Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 2, Problem 6PB
Gadell Farms produces venison sausage that is distributed to grocery stores throughout the Southeast. They have collected this shipping cost data:
- Prepare a scatter graph of the shipping data. Plot cost on the vertical axis and tons produced on the horizontal axis. Is the relationship between packaging costs and tons produced approximately linear? Draw a straight line through the scatter graph.
- Using the high-low method, estimate the cost formula for Gadell Farms’ packaging costs.
- The least-squares regression method was used and the analysis resulted in this cost equation: Y= 1650 + 78.57x. Comment on the accuracy of your high-low method estimation.
- What would you estimate packaging costs to be if Gadell Farms shipped 10 tons in a single month? Use the cost formula you obtained in part B. Comment on how accurately this is reflected by the scatter graph you constructed.
- What factors other than number of tons produced do you think could affect Gadell Farm’s packaging expense? Explain.
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1. You have been provided with the following data regarding shipments and costs for Brighton Boutiques:
Number of Shipments Received Cost per Receiving Report
$202
185
120
105
70
80
87
115
100
$300
$200
$100
$-
0
142
154
20
162
Required: Plot the data points on a scatter graph, and then using the high-low method, determine the cost function of the
line that will connect the high and low points on the graph. Does the cost function appear to be linear in nature?
200
175
Graph Template
40
80
60
Number of Shipments
100
120
140
Fernando Garza's firm wishes to use factor rating to help select an outsourcing provider of logistics services.
a) With weights from 1
-
5 (5 being the highest) and ratings from 1
100 (100 being the highest), use the following table to help Garza make his decision.
In the following table, compute the weighted average score for each of the three companies (enter your responses rounded to one decimal place).
Weight Overnight
Criterion
Quality
Delivery
Cost
(W)
Shipping
Worldwide
Delivery
United
Freight
5
88
80
72
3
71
90
72
2
71
85
97
Weighted average score:
79.5
84
77
The best outsource provider is Worldwide Delivery
b) Garza decides to increase the weights for quality, delivery, and cost to 10, 6, and 4, respectively.
If each weight is doubled, the best outsource provider is Worldwide Delivery .
How does this change your conclusions?
A. The conclusion changes since the weighted averages change.
B. The conclusion does not change but the weighted averages change.
C. The conclusion…
Carter Dry Cleaning has developed two regression analyses for cost estimation. The accounting manager has presented statistical measures for both of these regressions. Regression A has an R-squaredvalue of .53 and a t-value of 1.08. Regression B has an R-squared of .89 and a t-value of 2.17. Whatdo these statistical measures indicate about the regressions? Which regression should Carter DryCleaning use for cost estimation?
Chapter 2 Solutions
Principles of Accounting Volume 2
Ch. 2 - Which of the following is the primary source of...Ch. 2 - Which of the following is the primary source of...Ch. 2 - Which of the following is the primary source of...Ch. 2 - Which of the following represents the components...Ch. 2 - Which of the following represents the components...Ch. 2 - Which of the following represents the components...Ch. 2 - Conversion costs include all of the following...Ch. 2 - Which of the following is not considered a product...Ch. 2 - Fixed costs are expenses that...Ch. 2 - Variable costs are expenses that...
Ch. 2 - Total costs for ABC Distributing are $250,000 when...Ch. 2 - Which of the following would not be classified as...Ch. 2 - Which of the following are prime costs? A....Ch. 2 - Which of the following statements is true...Ch. 2 - The high-low method and least-squares regression...Ch. 2 - Which of the following methods of cost estimation...Ch. 2 - In the cost equation Y=a+bx, Y represents which of...Ch. 2 - A scatter graph is used to test the assumption...Ch. 2 - Identify the three primary classifications of...Ch. 2 - Explain how the income statement of a...Ch. 2 - Walsh & Coggins, a professional accounting firm,...Ch. 2 - Lizzys is a retail clothing store, specializing in...Ch. 2 - Identify and describe the three types of product...Ch. 2 - Explain the difference between a period cost and a...Ch. 2 - Explain the concept of relevant range and how it...Ch. 2 - Explain the differences among fixed costs,...Ch. 2 - Explain the difference between prime costs and...Ch. 2 - Explain how a scatter graph is used to identify...Ch. 2 - Explain the components of the total cost equation...Ch. 2 - Explain how the high-low method is used for cost...Ch. 2 - Magio Company manufactures kitchen equipment used...Ch. 2 - Park and West, LLC, provides consulting services...Ch. 2 - Canine Couture is a specialty dog clothing...Ch. 2 - Hicks Contracting collects and analyzes cost data...Ch. 2 - Rose Company has a relevant range of production...Ch. 2 - Carr Company provides human resource consulting...Ch. 2 - Western Trucking operates a fleet of delivery...Ch. 2 - Suppose that a company has fixed costs of $18 per...Ch. 2 - The cost data for Evencoat Paint for the year 2019...Ch. 2 - This cost data from Hickory Furniture is for the...Ch. 2 - Markson and Sons leases a copy machine with terms...Ch. 2 - Markson and Sons leases a copy machine with terms...Ch. 2 - Winterfell Products manufactures electrical...Ch. 2 - CPK ** Associates is a mid-size legal firm,...Ch. 2 - Flip or Flop is a retail shop selling a wide...Ch. 2 - Roper Furniture manufactures office furniture and...Ch. 2 - Baxter Company has a relevant range of production...Ch. 2 - Sanchez & Vukmin, LLP, is a full-service...Ch. 2 - Case Airlines provides charter airline services....Ch. 2 - Suppose that a company has fixed costs of $11 per...Ch. 2 - The cost data for BC Billing Solutions for the...Ch. 2 - This cost data from Hickory Furniture is for the...Ch. 2 - Able Transport operates a tour bus that they lease...Ch. 2 - Able Transport operates a tour bus that they lease...Ch. 2 - Ballentine Manufacturing produces and sells...Ch. 2 - Tom West is a land surveyor who operates a small...Ch. 2 - Just Beachy is a retail business located on the...Ch. 2 - Listed as follows are various costs found in...Ch. 2 - Wachowski Company reported these cost data for the...Ch. 2 - Carolina Yachts builds custom yachts in its...Ch. 2 - Hicks Products produces and sells patio furniture...Ch. 2 - Conner ** Scheer, Attorneys at Law, provide a wide...Ch. 2 - Puzzles, Pranks ** Games is a retail business...Ch. 2 - Pocket Umbrella, Inc. is considering producing a...Ch. 2 - Using the costs listed in the previous problem,...Ch. 2 - Gadell Farms produces venison sausage that is...Ch. 2 - In a team of two or three students, interview the...Ch. 2 - This list contains costs that various...
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