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

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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).

MonthNumber of daysTable model 1Table model 2Total Tables(model 1+model 2)(1)Drilling electricity usage (kwh)(2)Other electricity usage (kwh)(1)+(2)Total electricity usage(kwh)
1315,000243
228249
331261
430337.9
531489
630607.2
731638.4
831697.5
930480
1031337.9
1130246
123110,000400

 

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.

 

MonthTotal TablesTotal Electricity CostRentOther expensesRaw material costsLabour costs
15,000 3,0005,642
2 3,000 6,000
3 3,0006,540
4 3,0007,000
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
1210,000 3,0008,800

 

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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