Remy Dio Problem PDF

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Summary

Includes computation of high low method...

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L1 -Post-test Part 2 1 Remy Dio is examining customer-service costs Apectricity Company. Apectricity Company has more than 200 separate electrical products that are sold with a six-month guarantee of full repair or replacement with a new product. When a product is returned by a customer, a service report is prepared. This service report includes details of the problem and the time and cost of resolving the problem. Weekly data for the most recent 8-week period are as follows: Week 1 2 3 4 5 6 7 8

Customer-Service Costs (P) 13,700 20,900 13,000 18,800 14,000 21,500 16,900 21,000

No. of service reports 190 275 115 395 265 455 340 305

Using the high-low method to compute the cost function, relating to customer-service costs to the number of service reports.

High Low Difference

Customer-Service Costs 21,500 13,000 ₱8,500

No. of Service Reports 455 115 ₱340

Variable Rate = P 8,500 ÷ P 340 = P 25 per service reports High level of activity : TVC = (25)(455) = P 11,375 Low level of activity : TVC = (25)(115) = P2,875 Cost equation: y = a +bx y = P 10,125 + P25x

Fixed Rate = P 21,500 - (P25)(455) = P 10,125 High level of activity : a = 21,500 - 11,375 = P 10,125 Low level of activity : a = 13,000 - 2,875 = P 10,125 2 The data below are found to be highly correlated for Reliable China Modem Company: Fabricating Cost (y) 15,600 18,000 17,100 21,300 19,500 ₱91,500

Kilograms of Materials Used (x) 360 463 412 595 520 ₱2,350

xy 5,616,000 8,334,000 7,045,200 12,673,500 10,140,000 ₱43,808,700

x^2 129,600 214,369 169,744 354,025 270,400 ₱1,138,138

Write an equation reflecting the relationship between fabricating costs and kgs. Of materials used, using the method of least squares.

y = a + bx b = nΣxy - (Σx)(Σy) / nΣx^2 - (Σx)^2

where:

n = number of items

b = (5)(43,808,700) - (91,500)(2,350) / (5)(1,138,138) - 5,522,500 b = 219,043,500 - 215,025,000 / 168,190 b = 4,018,500 / 168,190 b = 23.8926214 a = Σy - bΣx / n a = 91,500 - (23.89)(2,350) / 5 a = 91,500 - 56,141.50 / 5 a= 35,358.5/5 a = P 7,071.70

Cost Equation: y = a +bx y = P 7,071.70 + 23.89x...