Decision Support Tools : Assignment

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Added on 2019-10-31

Decision Support Tools : Assignment

Added on 2019-10-31

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DECISION SUPPORT TOOLSQuestion 3a)The relevant excel output is as indicated below.

DECISION SUPPORT TOOLSb)Based on the above computation, it is apparent that the average monthly profit over the 12 month period for the company amounts to $ 808.53c)The relevant excel output is pasted below under the altered selling pricing.

DECISION SUPPORT TOOLSTo: Sales ManagerDate: September 19, 2017Based on the above output, it is apparent that there has been a jump in the average profit onaccount of increased selling price. The $ 20 jump in the selling price has caused the averageprofit to double owing to higher profit margins. This is in line with the expectations at thetime of the price increase.However, a tacit assumption that has been made in the above analysis is that there would notbe any adverse impact on the sales which may not hold true. In case of sales declining onaccount of the higher prices, then there could be neutralisation of the higher profit marginswith the lower sales leading to the average profits being adversely impacted. As a result, it iscrucial to keep an eye on the monthly sales and comparing the same with previous orexpected sales volume so that rectifying measure can be taken if required.Yours SincerelySTUDENT NAMEQuestion 4a)In the high low method, the objective is to determine the various regression coefficients using the given data.Variable cost per unit = (Overhead cost at highest machine hours – Overhead cost at lowest machine hours)/(Highest machine hours – Lowest machine hours)Thus, taking into consideration, the given data,Variable cost per unit = (48000-46000)/(3800-1800) = $1Total fixed cost = 48000 – 3800*1 = $ 44,200Hence, the regression equation using the high low method is indicated below.Total overheads cost = 44200 + 1*Machine HoursHence, estimated overheads cost for 3000 machine hours = 44200 +1*3000 = $ 47,200b)Regression output using machine hours as the independent variable

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