Excel expert needed to copy figures from a document and type them in an excel file. This is needed in 6 hours from now

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Answer

ACCT 640 Case 3 Performance Drinks, LLC

Case #3 – A Further Study of: Regression Analysis, Contribution Margin Reporting, Cost-Volume-Profit Analysis, Differential Analysis, Capital Budgeting

1. Using the data provided, run the following regression analyses:

a) Linear regression analyzing total overhead and units sold

See accompanying excel file

b) Linear regression analyzing total overhead cost and machine hours used

See accompanying excel file

c) Multiple regression analysis analyzing total overhead cost along with both units sold and machine hours used See accompanying excel file

2. Based on the results from the three regression analyses determine which correlation provides the best estimate of the total cost equation.  Explain why you selected the correlation that you did. 

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The multiple regression fits the data the best because it has the highest R squared coefficient. R squared coefficient is the best indicator for how well the regression equation fits the data.     

 

 

3. Write out the total cost equation using the results from the multiple regression test.

Total Cost = $50,690 + $.1314(units sold) + $3.0977(machine hours)

 

4. Create a “Contribution” formatted income statement using the results from the multiple regression test.

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5.       Compute the following:

a)

http://book.transtutors.com/qimage/imageqa11202014026.png

b)      

 

http://book.transtutors.com/qimage/imageqa11202014027.png

 

c)

http://book.transtutors.com/qimage/imageqa11202014028.png

d)

http://book.transtutors.com/qimage/imageqa11202014029.png

 

6.  Conduct a differential analysis regarding this special order.  Would you accept this order under the conditions provided?  Explain and defend your position.

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Accept the special order because there is differential profit.

 

7.       The discount rate for this project is 5%.  Compute the following:

i) Net Present Value

ii) Internal Rate of Return

Would you recommend investing in this new piece of equipment?  Explain and defend your position.

http://book.transtutors.com/qimage/imageqa11202014031.png

The new equipment should be purchased because the equipment has a positive net present value and the internal rate of return (5.14%) is greater than the hurdle rate of 5%.