1. What is the cost equation for maintenance costs using the high-low method? 2. Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1.
1. What is the cost equation for maintenance costs using the high-low method? 2. Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Ethan Manufacturing Inc. produces floor mats for automobiles. The owner, Joseph Ethan, has asked you to assist in estimating
maintenance costs. Together, you and Joseph determine that the single best cost driver for maintenance costs is machine hours.
These data are from the previous fiscal year for maintenance costs and machine hours:
Month
1
2345 67 000
8
9
10
11
12
Maintenance
Costs
$ 2,740
2,900
3,050
3,160
3,240
3,210
3,150
2,990
2,760
2,360
2,370
2,590
Machine
Hours
1,830
1,910
1,990
2,010
2,040
2,020
2,000
1,980
1,840
Required 1 Required 2
1,240
1,440
1,730
Required:
1. What is the cost equation for maintenance costs using the high-low method?
2. Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1.
Complete this question by entering your answers in the tabs below.
Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1. (Do not round
intermediate calculations, with the exception of MAPE for each month, which should be rounded to three decimal places. Input
your final answer as a percentage rounded to 1 decimal place (i.e., 0.054 = 5.4%). Include any outliers in your calculations.)
Mean absolute percentage error (MAPE)
%
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