Reference no: EM132460638

Anderson Engineering provides consulting services and custom installations of proprietary industrial waste water treatment facilities. They also operate a repair shop for repairs and maintenance of the treatment products. The repair facility costs include salaries, insurance and depreciation, and materials and parts. The supervisor would like to develop a model that predicts repair costs.

Data for the past year is below: by month, job, repair cost (order)

January	55	$22,000
February	45	18,000
March	40	17,600
April	50	20,000
May	65	24,000
June	60	22,400
July	35	16,000
August	30	12,800
September	25	13,600
October	20	9,600
November	25	14,100
December	30	13,000

Question 1: How would you use a scattergram by plotting jobs and repair costs on a graph.

Question 2: Use Excel functions to determine the fixed and variable cost components of repair jobs. Clearly state and label these in your answer.

Question 3: Use the high-low method to determine the fixed and variable cost components of repair jobs. Clearly state and label these in your answer.

Question 4: Discuss the difference between the two answers from parts b and c. Which method is more reliable? Why?

Question 5: The supervisor expects to receive 70 repair jobs next month. What are the predicted costs? Provide an amount for fixed, variable, and total costs. Use the formula that you identified in part d as more reliable.