Daraz.pk is a fast growing e-commerce business in Pakistan. Daraz delivers the product ordered on its website to the customer’s doorstep. The management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. The relevant range is 1000 to 6000 miles. If the number of miles traveled increases from 6000, then the variable cost per unit would remain constant whereas fixed cost would increase by 10%. Following is the information: Month Miles Shipping Cost January 4,200 $48,000 February 1,500 24,000 March 1,100 16,000 April 2,900 35,000 May 5,100 52,000 June 2,200 32,000 Required: Estimate the proportion of variable and fixed cost through OLS regression method Calculate the mixed cost equation What Shipping cost would you expect to be incurred at an activity level of 7000 Miles?
Daraz.pk is a fast growing e-commerce business in Pakistan. Daraz delivers the product ordered on its website to the customer’s doorstep. The management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. The relevant range is 1000 to 6000 miles. If the number of miles traveled increases from 6000, then the variable cost per unit would remain constant whereas fixed cost would increase by 10%. Following is the information: Month Miles Shipping Cost January 4,200 $48,000 February 1,500 24,000 March 1,100 16,000 April 2,900 35,000 May 5,100 52,000 June 2,200 32,000 Required: Estimate the proportion of variable and fixed cost through OLS regression method Calculate the mixed cost equation What Shipping cost would you expect to be incurred at an activity level of 7000 Miles?
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 10EB: Keleher Industries manufactures pet doors and sells them directly to the consumer via their web...
Related questions
Question
Daraz.pk is a fast growing
|
Month |
Miles |
Shipping Cost |
|
January |
4,200 |
$48,000 |
|
February |
1,500 |
24,000 |
|
March |
1,100 |
16,000 |
|
April |
2,900 |
35,000 |
|
May |
5,100 |
52,000 |
|
June |
2,200 |
32,000 |
Required:
- Estimate the proportion of variable and fixed cost through OLS regression method
- Calculate the mixed cost equation
- What Shipping cost would you expect to be incurred at an activity level of 7000 Miles?
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