The Feline Company Has Been Having Some Difficulties Estimating Its

question 85

Essay

The Feline Company has been having some difficulties estimating its manufacturing overhead costs.In the past,manufacturing overhead costs have been related to production levels.However,some production managers have indicated that the size of their production lots might also be having an impact on the amount of their monthly manufacturing overhead costs.In order to investigate this possibility,the company collected information on its monthly manufacturing overhead costs,production in units,and average production lot size for 2016.
$$\begin{array} { | c | r | r | c | } \hline \text { Month } & \begin{array} { r } \text { Production } \\\text { (Units) }\end{array} & \begin{array} { r } \text { Manufacturing } \\\text { Ovenead Cost }\end{array} & \begin{array} { c } \text { Average Monthly } \\\text { Production Lot Size }\end{array} \\\hline 1 & 75,000 & \$ 925,800 & 20 \\\hline 2 & 90,000 & 843,875 & 19 \\\hline 3 & 65,000 & 910,125 & 24 \\\hline 4 & 80,000 & 946,000 & 19 \\\hline 5 & 55,000 & 879,000 & 24 \\\hline 6 & 50,000 & 825,000 & 18 \\\hline 7 & 85,000 & 960,000 & 22 \\\hline 8 & 105,000 & 1,053,500 & 25 \\\hline 9 & 102,000 & 1,020,000 & 23 \\\hline 10 & 68,000 & 905,000 & 20 \\\hline 11 & 75,000 & 938,000 & 22 \\\hline 12 & 95,000 & 995,000 & 24 \\\hline\end{array}$$
Required:
(a. )Use the high-low method to estimate next month's manufacturing overhead costs,assuming the company is planning to produce 92,000 units.(b. )Use the high-low method to estimate next month's manufacturing overhead costs,assuming the company is planning to run a 21-lot size.

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Definitions:

Confidence Interval

A selection of values, garnered from statistical analysis of samples, presumed to contain the value of a cryptic population parameter.

Bootstrap Method

A statistical method that involves repeatedly sampling with replacement from a data set to estimate the sampling distribution and compute statistical accuracies.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, indicating how much the individual values differ from the mean of the values.

Resamples

The action of taking multiple sample sets from the original data, often used in bootstrap methods and other resampling techniques in statistics.