Jeff Merchandisers (JM)has determined with 100 percent certainty the following costs for making one unit of its only product:
The company is,however,not sure of the behaviour of its total indirect manufacturing costs (that is,manufacturing overhead).The controller therefore ran a simple regression based on 20 pairs of monthly observations and obtained the following results:
Y represents total monthly manufacturing overhead costs while X represents total monthly manufacturing direct labour costs.
Required:
Assume JM incurs NO selling and administrative expenses.What is your best estimate of the company's monthly breakeven sales in units at a guaranteed selling price of $20.00 per unit?

Question

Jeff Merchandisers (JM)has determined with 100 percent certainty the following costs for making one unit of its only product:  
The company is,however,not sure of the behaviour of its total indirect manufacturing costs (that is,manufacturing overhead).The controller therefore ran a simple regression based on 20 pairs of monthly observations and obtained the following results:  
Y represents total monthly manufacturing overhead costs while X represents total monthly manufacturing direct labour costs.
Required:
Assume JM incurs NO selling and administrative expenses.What is your best estimate of the company's monthly breakeven sales in units at a guaranteed selling price of $20.00 per unit?

Quizplus · Accepted Answer

The Answer of Jeff Merchandisers (JM)has determined with 100 percent certainty the following costs for making one unit of its only product:  
The company is,however,not sure of the behaviour of its total indirect manufacturing costs (that is,manufacturing overhead).The controller therefore ran a simple regression based on 20 pairs of monthly observations and obtained the following results:  
Y represents total monthly manufacturing overhead costs while X represents total monthly manufacturing direct labour costs.
Required:
Assume JM incurs NO selling and administrative expenses.What is your best estimate of the company's monthly breakeven sales in units at a guaranteed selling price of $20.00 per unit?

Jeff Merchandisers (JM)has Determined with 100 Percent Certainty the Following