Umipig, Abby Marileth M.

BSA-181A

HANDOUT NO. 1 – INTRODUCTION TO MA AND COST CONCEPTS

Multiple Choice

1. D 11. A 21. D 31. C

2. A 12. C 22. C 32. D
3. C 13. B 23. C 33. E
4. A 14. C 24. A 34. B
5. C 15. C 25. C 35. A
6. D 16. C 26. A 36. C
7. B 17. D 27. E 37. A
8. C 18. B 28. D 38. C
9. C 19. D 29. E 39. C
10. D 20. D 30. B 40. A

Problem 5 – Asynchronous Activity

The following data pertain to Dicky Corporation’s production of units and total overhead costs for the
first six weeks of its operations:

Production Utility Costs

8 P 205
11 230
10 225
12 240
7 210

Using the scatter graph, high-low method and regression analysis

a. Determine the estimated amount of total fixed utilities cost

b. Determine the estimated amount of variable utilities cost per unit
c. Determine the estimated amount of total utilities cost if 6 units are produced
Scatter Graph

250

240

230

220

210

200

190

180
6 7 8 9 10 11 12 13

Total Fixed Utility Cost = 200

Variable Utilities Cost per Unit =(y2 – y1) / (x2 – x1)

= (235 – 200) / (14 – 0)
= 35/14
b = 2.5

Total Utilities Cost if 6 Units are Produced = y = a +bx

= 200 + 2.5 (10)
y = 225

High-Low Method

b = Hy -Ly
Hx – Lx

b = 240 – 210
12 – 7

b=6

Variable Utilities Cost Per Unit = 6

 a = Hy – b(Hx) = Ly -b(Lx)
240 – 6(12) = 210 – 6(7)
168 – 168

Fixed Utilities Cost = 168

y = a + bx
168 + 6(6)
204

Total Utilities Cost if 6 Units are Produced = 204

Regression Analysis

∑y = Na + b∑x
∑xy = ∑xa + b∑x

x y x
2
xy
8 P 205 2
8 = 64 (8x205) = 1,640
11 230 2
11 = 121 (11x230) = 2,530
10 225 2
10 = 100 (10x225) = 2,250
12 240 2
12 = 144 (12x240) = 2,880
7 210 2
7 = 49 (7x210) = 1,470
48 1,110 478 10,770

∑y = Na + b∑x
y = Na + b(27)
1,110 = Na + 48b
1,110 = 5a + 48b
1,110 = 5a + 48b

∑xy = ∑xa + b∑x

xy = xa + b(163)
10,770 = 48a + 478b

Equation No. 1 = 1,110 = 5a + 48b

Equation No. 2 = 10,770 = 48a + 478b

Step 1 = -9.6 (1,110 = 5a + 48b)

-10,656 = -48a – 460.8

Step 2 = -10,656 = -48a – 460.8

10,770 = 48a + 478b
Step 3 = 114 = 17.2
17.2 = 17.2

b = 114
17.2

b = 6.63

Variable Utilities Cost per Unit = 6.63

y = Na + bx
1,110 = 5a + 48(6.63)
5a = 791.76
5a = 791.76
5 5
791.76 = 158.35
5
Total Fixed Utilities Cost = 158.35

y = a + bx
y = 158.35 + 6.63(6)
y = 158.35 + 39.78
y = 198.13

Total Utilities Cost if 6 Units are Produced = 198.13