Prepare scatterplots and graphing the total maintenance cost

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Reference no: EM131570307

Problem -

XYZ Company has been using Units Produced to allocate Maintenance Costs. Cal Q. Lator, the accounting manager, has been noticing wild shifts in the amount of maintenance being charged, so he wants you to look into it. Data has been gathered for several possible cost drivers along with total maintenance. Using regression, determine which of units produced, batches processed, machine hours, or direct labor hours is the best cost driver for maintenance costs. Prepare a memo to Cal to choose the best cost driver and predict what September maintenance costs will be based on the selected cost driver.

Data: Month

Units Produced

Batches Processes

Machine Hours

DL Hours

Total Maintenance Costs

Sep-13

864

1,737

23,400

45,468

$ 38,159

Oct-13

822

1,734

28,600

56,887

$ 42,312

Nov-13

1074

1,752

27,950

95,014

$ 47,119

Dec-13

900

1,777

30,680

69,094

$ 44,190

Jan-14

900

1,792

31,850

74,941

$ 45,825

Feb-14

846

1,790

22,880

50,310

$ 39,867

Mar-14

912

1,839

26,000

71,314

$ 44,549

Apr-14

768

1,853

20,540

34,777

$ 36,321

May-14

948

1,731

23,725

49,153

$ 37,962

Jun-14

1152

1,737

27,950

78,947

$ 42,132

Jul-14

780

1,729

26,000

43,540

$ 38,955

Aug-14

750

1,785

26,650

41,683

$ 38,894

Sep-14

672

1,678

23,140

31,774

$ 36,821

Oct-14

810

1,566

26,585

45,556

$ 39,060

Nov-14

900

1,604

26,884

49,588

$ 38,774

Dec-14

888

1,612

23,205

43,467

$ 37,237

Jan-15

660

1,696

21,060

21,609

$ 33,158

Feb-15

936

1,930

22,880

33,061

$ 33,380

Mar-15

678

1,543

23,985

31,813

$ 36,731

Apr-15

804

1,492

23,530

35,396

$ 36,006

May-15

912

1,683

31,980

69,548

$ 44,064

Jun-15

960

1,785

35,399

83,162

$ 46,656

Jul-15

852

1,530

30,498

63,007

$ 43,488

Aug-15

900

1,870

29,302

70,367

$ 44,454

Estimated Activity





Sep-15

792

1,791

24,005

49,006


Required: Prepare an Excel spreadsheet to complete the following requirements. The information above is your data section.

1. Run regression for each of the potential cost drivers, and create a cost equation for each.

2. Prepare scatterplots, graphing the total maintenance cost and each of the potential cost drivers. Include a linear trendline on the graph, with le and the equation.

3. Excel spreadsheet should be formatted to print so that the page breaks make sense. Numbers should be formatted to make the report easy to read.

Reference no: EM131570307

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