Exercises 3-9 req.

1-11
1. The cost of power when a fixed fee of $800 per month is charged plus an
additional charge of $0.15 per kilowatt-hour used.
2. Commissions paid to sales representatives. Commissions are paid at the
rate of 3 percent of sales made up to total annual sales of $500,000, and 5
percent of sales above $500,000.
3. A part purchased from an outside supplier costs $10 per part for the first
5,000 parts and $8 per part for all parts purchased in excess of 5,000 units.
4. The cost of surgical gloves, which are purchased in increments of 100
units (gloves come in boxes of 100 pairs).
5. The cost of tuition at a local community college that charges $250 per credit
hour up to 15 credit hours. Hours taken in excess of 15 are free.
6. The cost of tuition at another college that charges $4,500 per semester for
any course load ranging from 12 to 16 credit hours. Students taking fewer
than 12 credit hours are charged $375 per credit hour. Students taking
morethan 16 credit hours are charged $4,500 plus $300 per credit hour in
excess of 16.
7. A beauty shop’s purchase of soaking solution to remove artificial nails.
Each jar of solution can soak off approximately 50 nails before losing its
effectiveness.
8. Purchase of diagnostics equipment by a company for inspection of
incoming orders.
9. Use of disposable gowns by patients in a hospital.
10. Cost of labor at a local fast-food restaurant. Three employees are
alwayson duty during working hours; more employees can be called in during
periods of heavy demand to work on an “as-needed” basis.
11. A manufacturer found that the maintenance cost of its heavy machinery
was tied to the age of the equipment. Experience indicated that the
maintenance cost increased at an increasing rate as the equipment aged.
Exercise 3-10 requirements 3 and 4
3. Using the high-low method, prepare a cost formula for the receiving activity.

4. Using the method of least squares, prepare a cost formula for the receiving
activity. What is the coefficient of determination?
Month Purchase Receiving X2 XY
Orders (x) Costs (y)
1 1000 18600
2 700 14000
3 1500 28000
4 1200 17500
5 1300 25000
6 1100 21000
7 1600 28000
8 1400 24000
9 1700 26000
10 900 16000