Reference no: EM132695040
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:
Month Jobs Repair costs
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
Required:
Question 1: Using Microsoft Excel, Show a scatter gram 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.