Compare rates of two electricity providers and choose the cheapest one based on your electricity usage for a year

Estimate the cost of producing 9,000 and 10,500 tables. Explain your results

 

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Assignment Part 1

Suppose you have both monthly production data and monthly electricity usage (12 data points).

Month Number of days Table model 1 Table model 2 Total Tables(model 1+model 2) (1)Drilling electricity usage (kwh) (2)Other electricity usage (kwh) (1)+(2)Total electricity usage(kwh)
1 31 5,000 243
2 28 249
3 31 261
4 30 337.9
5 31 489
6 30 607.2
7 31 638.4
8 31 697.5
9 30 480
10 31 337.9
11 30 246
12 31 10,000 400

 

To complete the above table make the following assumptions:

Each table needs 30 minutes drilling.

Total number of tables in each month is between 5,000 and 10,000 and not equal to them.

 

1.Compare rates of two electricity providers and choose the cheapest one based on your electricity usage for a year.

electricity

 

2. Design an Excel file that can be used as a tool for comparing prices of these electricity providers. Provide a brief guide about how this tool works and provide few examples and pictures.

 

Assignment Part 2

Assume that monthly electricity costs (based on the cheapest electricity provider) and production levels from part 1 are given as past data. Complete this table using the following assumptions:

Raw material cost per table is $20.

Each table requires 2 hours labour work and the labour rate is $17 per hour.

Use number of tables as a cost driver.

The relevant range is between 5,000 and 9,500 tables.

 

Month Total Tables Total Electricity Cost Rent Other expenses Raw material costs Labour costs
1 5,000  3,000 5,642
2  3,000  6,000
3  3,000 6,540
4  3,000 7,000
5  3,000  7,536
6  3,000  9,565
7  3,000  11,345
8  3,000  10,007
9  3,000  7,589
10  3,000  6,700
11  3,000  4,152
12 10,000  3,000 8,800

 

Required:

1. Use your judgment to classify costs as fixed, variable or mixed. Explain your basis for your classification.

2. Estimate the total cost formula for the organisation using the high-low and regression methods for mixed costs.

3. Estimate the cost of producing 9,000 and 10,500 tables. Explain your results.

 

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