Drogs, Inc., would like to determin the behavior of administrative costs. The data shown are to be used for this purpose.
1.) What is the cost equation if units produced are used to predict?
2.) If the firm uses units sold to predict, what are administrative costs expected to be if 100 units are sold?
Solution
Month Admin Costs Units Produced If Units produced are taken as base Units Sold If Units Sold are taken as base Hours Worked Grievances Filed March 21,000 100 210 110 190.91 1,100 10 April 19,000 80 237.5 100 190.00 900 7 May 24,000 120 200 90 266.67 1,100 15 June 20,000 105 190.48 95 210.53 1,050 6 July 26,000 130 200 120 216.67 1,200 20 Note: Administrative cost is varying in inadequate manner with units produced and units sold.
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Drogs- Inc-- would like to determin the behavior of administrative cos (1).docx
1. Drogs, Inc., would like to determin the behavior of administrative costs. The data shown are to
be used for this purpose.
1.) What is the cost equation if units produced are used to predict?
2.) If the firm uses units sold to predict, what are administrative costs expected to be if 100 units
are sold?
Admin Costs Units Produced Units Sold Hours Worked Grievances Filed
March 21,000 100 110 1,100 10
April 19,000 80 100 900 7
May 24,000 120 90 1,100 15
June 20,000 105 95 1,050 6
July 26,000 130 120 1,200 20
Solution
Month Admin Costs Units Produced If Units produced are taken as base Units Sold If Units Sold
are taken as base Hours Worked Grievances Filed March 21,000 100 210 110 190.91 1,100 10
April 19,000 80 237.5 100 190.00 900 7 May 24,000 120 200 90 266.67 1,100 15 June 20,000
105 190.48 95 210.53 1,050 6 July 26,000 130 200 120 216.67 1,200 20 Note: Administrative
cost is varying in inadequate manner with units produced and units sold.
