Tools Are Us Corporation produces toolboxes used by construction professionals and homeowners. The company is concerned that it does not have an understanding of its utility consumption. The company’s president, George, has asked the plant manager and cost accountant to work together to get information about utilities cost. The two of them accumulated the following data for the past 14 months (production volume is presented in units):

 

January

113,000 (Production)
$1,712 (utility cost)

February

114,000 (production)
 1,716 (utility)

March
 90,000 (production)
 1,469 (utility)

April
110,000 (production)
1,600 (utility)

May
112,000 (production)
1,698 (utility)

June
101,000 (production)
 1,691(utility)

July
104,000 (production)
 1,700 (utility)

August
105,000 (production)
 1,721(utility)

September
115,000 (production)
 1,619 (utility)

October
 97,000 (production)
1,452 (utility)

November
 98,000 (production)
1,399 (utility)

December
98,000 (production)
1,403 (utility)

January
112,000 (production)
1,543 (utility)

February

107,000 (production)
1,608 (utility)

Required

A.    Use the high/low method to determine the company’s utility cost equation.
B.    What would be the expected utility cost of producing 120,000 units? (The relevant range is 85,000 to 125,000 units of production.)
C.    Using the data shown and a spreadsheet program, perform a regression analysis. Discuss any differences in the results and the potential impact on decision making. (Sawyers 114)

Sawyers,  Jackson,  Jenkins. Managerial ACCT2, 2e, 2nd Edition. Cengage Learning, 02/2012. VitalBook file.

The citation provided is a guideline. Please check each citation for accuracy before use.

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