Reference no: EM132669896
Question - ABC Company is continuing to re-evaluate all aspects of the business and would like you to look into staffing costs. Below is a summary of the monthly costs.
|
|
Staff number
|
Number of meals
|
Staff cost ($)
|
|
January
|
20
|
700
|
27800
|
|
February
|
22
|
250
|
14000
|
|
March
|
10
|
200
|
12000
|
|
April
|
20
|
500
|
20000
|
|
May
|
24
|
650
|
23800
|
|
June
|
28
|
450
|
18400
|
|
July
|
16
|
50
|
20400
|
|
August
|
14
|
150
|
8200
|
|
September
|
24
|
350
|
18800
|
|
October
|
24
|
600
|
22200
|
|
November
|
16
|
300
|
16600
|
|
December
|
32
|
750
|
32200
|
ABC Co. relevant range has been estimated to be between 300 and 600 meals.
Required -
1. Draw a scatter diagram of ABC co. meals and staff costs and mark the relevant range.
2. Use the high-low method to estimate the behaviour of Pork Bellies staff costs based on meal numbers within the relevant range. Use an equation to express the results of this estimation method.
3. Using excel or a similar program construct a regression analysis to estimate:
4. The equation to predict staff costs based on the number of meals within the relevant range
5. Based on the equation in 3 a) what would the staff cost be with 400 meals per month.
6. Using both activities - number of meals and staff numbers, determine what the staff cost, within the relevant range, would be.
7. Does the inclusion of the additional cost driver (staff number) improve the model? Explain your answer.