Required information The Hard Rock Mining Company is developing cost formulas for management planning and decision-makin

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Required Information The Hard Rock Mining Company Is Developing Cost Formulas For Management Planning And Decision Makin 1 (38.57 KiB) Viewed 13 times

Required information The Hard Rock Mining Company is developing cost formulas for management planning and decision-making purposes. The company's cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base that correlates with the cost. The controller has suggested that tons mined might be a good base to use in developing a cost formula. The production superintendent disagrees; she thinks that direct labor-hours would be a better base. The cost analyst has decided to try both bases and has assembled the following information: Quarter Year 1:1 First Second Third: Fourth Year 2: First Second Third Fourth Tons Mined 17,000 13,000 22,000 14,000 20,000 27,000 32,000 30,000 Direct Labor-Hours 5,200 3,200 4,200 6,200 10,400 9,600 8,400 11,400 Utilities Cost $ 52,000 $ 47,000 $ 62,000 $ 77,000 $110,000 $115,000 $ 87,000 $124,000 Required: 1. Using the least-squares regression method, estimate the variable utilities cost per ton mined and the total fixed utilities cost per quarter. Express these estimates in the form Y=a+bX. (Round the Variable cost per unit to 2 decimal places and Fixed Cost to the nearest whole dollar amount.)