Homework Help is Here – Start Your Trial Now!
Business
Economics
The Cary Plant produces a part for agricultural equipment. The plant produces to demand rather than maintaining significant Inventories, so there can be significant fluctuation in monthly output. One of the significant cost Items is maintenance and repair (M&R) costs. M&R consists of both routine and unscheduled costs. The plant manager is trying to understand what effect production volume has on M&R costs and is getting conflicting Information from the machine operators (who believe that higher output is related to higher M&R costs) and the financial staff (who say that their analyses do not show this). Data on monthly output (In machine hours) and monthly M&R costs for the most recent two fiscal years follow: Month October November December January February March April May June July August September October November December Machine-Hours 223,560 235,980 397,440 310,500 385,020 558,900 273,240 360,180 285,660 298,080 322,920 186,300 211,140 322,920 372 600 M&R Cost $ 56,510 59,320 24,150 34,230 36,340 9,140 36,580 43,380 53,230 52,290 30,250 55,570 48,070 29,780 42 678

The Cary Plant produces a part for agricultural equipment. The plant produces to demand rather than maintaining significant Inventories, so there can be significant fluctuation in monthly output. One of the significant cost Items is maintenance and repair (M&R) costs. M&R consists of both routine and unscheduled costs. The plant manager is trying to understand what effect production volume has on M&R costs and is getting conflicting Information from the machine operators (who believe that higher output is related to higher M&R costs) and the financial staff (who say that their analyses do not show this). Data on monthly output (In machine hours) and monthly M&R costs for the most recent two fiscal years follow: Month October November December January February March April May June July August September October November December Machine-Hours 223,560 235,980 397,440 310,500 385,020 558,900 273,240 360,180 285,660 298,080 322,920 186,300 211,140 322,920 372 600 M&R Cost $ 56,510 59,320 24,150 34,230 36,340 9,140 36,580 43,380 53,230 52,290 30,250 55,570 48,070 29,780 42 678

Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter5: Investment Decisions: Look Ahead And Reason Back
Section: Chapter Questions
Problem 5.5IP
See similar textbooks
icon
Related questions
Question

Qa.1.

The Cary Plant produces a part for agricultural equipment. The plant produces to demand rather than maintaining significant Inventories, so there can be significant fluctuation in monthly output. One of the significant cost Items is maintenance and repair (M&R) costs. M&R consists of both routine and unscheduled costs. The plant manager is trying to understand what effect production volume has on M&R costs and is getting conflicting Information from the machine operators (who believe that higher output is related to higher M&R costs) and the financial staff (who say that their analyses do not show this). Data on monthly output (in machine hours) and monthly M&R costs for the most recent two fiscal years follow: Month October November December January February March April May June July August September October November December January February March April May June July August September Regression Statistics Multiple R R Square Standard Error Machine-Hours 223,560 235,980 397,440 310,500 385,020 558,900 273,240 360,180 285,660 298,080 322,920 186,300 211,140 322,920 372,600 385,020 447,120 633,420 335,340 298,080 Observations Coefficients 422,280 477,120 360,180 285,660 Intercept Revenues M&R Cost $ 56,510 59,320 Required: b. Using Excel, estimate a linear regression with maintenance and repair (M&R) cost as the dependent variable and production (measured in machine hours) as the Independent variable. 24,150 34,230 36,340 Note: Negative amounts should be indicated by a minus sign. Round "Multiple R, R Square and Revenues to 5 decimal places, "Standard Error" to 1 decimal place, and "Intercept" to the nearest whole number. 24 9,140 36,580 43,380 53,230 52, 290 30,250 55,570 48,070 29,780 42,670 38,220 15,940 230 41,740 35,870 22,040 28,140 28,140 42,190
Transcribed Image Text:The Cary Plant produces a part for agricultural equipment. The plant produces to demand rather than maintaining significant Inventories, so there can be significant fluctuation in monthly output. One of the significant cost Items is maintenance and repair (M&R) costs. M&R consists of both routine and unscheduled costs. The plant manager is trying to understand what effect production volume has on M&R costs and is getting conflicting Information from the machine operators (who believe that higher output is related to higher M&R costs) and the financial staff (who say that their analyses do not show this). Data on monthly output (in machine hours) and monthly M&R costs for the most recent two fiscal years follow: Month October November December January February March April May June July August September October November December January February March April May June July August September Regression Statistics Multiple R R Square Standard Error Machine-Hours 223,560 235,980 397,440 310,500 385,020 558,900 273,240 360,180 285,660 298,080 322,920 186,300 211,140 322,920 372,600 385,020 447,120 633,420 335,340 298,080 Observations Coefficients 422,280 477,120 360,180 285,660 Intercept Revenues M&R Cost $ 56,510 59,320 Required: b. Using Excel, estimate a linear regression with maintenance and repair (M&R) cost as the dependent variable and production (measured in machine hours) as the Independent variable. 24,150 34,230 36,340 Note: Negative amounts should be indicated by a minus sign. Round "Multiple R, R Square and Revenues to 5 decimal places, "Standard Error" to 1 decimal place, and "Intercept" to the nearest whole number. 24 9,140 36,580 43,380 53,230 52, 290 30,250 55,570 48,070 29,780 42,670 38,220 15,940 230 41,740 35,870 22,040 28,140 28,140 42,190
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 10 steps with 10 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Breakeven Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Microeconomics: Principles & Policy
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
Micro Economics For Today
Micro Economics For Today
Economics
ISBN:
9781337613064
Author:
Tucker, Irvin B.
Publisher:
Cengage,
Survey Of Economics
Survey Of Economics
Economics
ISBN:
9781337111522
Author:
Tucker, Irvin B.
Publisher:
Cengage,
Economics For Today
Economics For Today
Economics
ISBN:
9781337613040
Author:
Tucker
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS