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JUSTIFICATION:
1. Linear is to identify the parameters of the hyperplane which best fits a regression
dataset, it is usual practice to first form the Least Squares cost function. This cost
function computes the total squared error between the associated hyperplane and the
data for a given set of parameters, providing a useful indicator of how well the
specific linear model fits the dataset.
2. A is the correct answer, to compute monthly production cost, fixed cost plus your
variable costs per unit multiplied by the number of units produced per month.
3. X Y XY x2
500 4,000 2,000,000 250,000
700 8,000 5,600,000 490,000
900 6,000 5,400,000 810,000
600 7,500 4,500,000 360,000
800 8,500 6,800,000 640,000
550 7,250 3,987,500 302,500
∑x=4,050 ∑y=41,250 ∑xy=28,287,500 ∑x2=2,852,500
Calculation of variable production cost per unit using least squares method as
follows:
Calculation:
= P 28,287,500 - [(6)*(675)*(6,875)] / [P 2,852,500 - (6)* (675)2]
= P 28,287,500 - P 27,843,750 / [P 2,852,500 - P 2,733,750]
= P 443,750 / P 118,750
= P 3.74
4. Calculation:
= [41,250 - (3.74*4,050)] / 6
= [41,250-15,147] / 6
= 26,103 / 6
= 4,350
5. The Highest activity of units produced is in the month of June - 900 units
with Total Production cost at P6,000.
The Lowest activity of units produced is in the month of April - 500 units
with Total Production cost at P4,000.
Variable Cost per unit = (Total production cost of higher activity - Total
production cost of lower activity) / (Higher units - Lower Units)
Variable Cost per unit = (P6,000-P4,000) / (900units - 500 units) = P5
Fixed Cost = Total Cost for any activity - (Variable cost per unit * units
produced)
Fixed Cost = P6,000 - (P5 * 900units)
Fixed cost = P1,500
Calculation:
= P5 – P3.74 = P1.26, Higher
= P1,500 – P4,350 = P2,850, Lower
7. Calculation:
Work in Process, beg. – Dept. 1 P 6,000
Started process – Dept. 1 14,000
P 20,000
Work in process, end – Dept. 1 (4,200)
Transferred out to Dept. 2 P 15,800
9. Calculation:
= P61,400 + (P18,600*72%)
= P61,400 + P13,392
= P74,792
10. Calculation:
= (P32,000*8.39) + (P20,000*3.19) + (P20,000*1.20)
= P268,480 + P63,800 + P24,000
=P356,280