Cost Estimation; High-Low Method; MAPE Ethan Manufacturing Inc. produces floor matsfor automobiles. The owner, Joseph Ethan, has asked you to assist in estimating maintenancecosts. Together, you and Joseph determine that the single best cost driver for maintenancecosts is machine hours. These data are from the previous fiscal year for maintenance costs andmachine hours:Month Maintenance Costs Machine Hours1 $2,600 1,6902 2,760 1,7703 2,910 1,8504 3,020 1,8705 3,100 1,9006 3,070 1,8807 3,010 1,8608 2,850 1,8409 2,620 1,70010 2,220 1,10011 2,230 1,30012 2,450 1,590Required1. 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.
Cost Estimation; High-Low Method; MAPE Ethan Manufacturing Inc. produces floor matsfor automobiles. The owner, Joseph Ethan, has asked you to assist in estimating maintenancecosts. Together, you and Joseph determine that the single best cost driver for maintenancecosts is machine hours. These data are from the previous fiscal year for maintenance costs andmachine hours:Month Maintenance Costs Machine Hours1 $2,600 1,6902 2,760 1,7703 2,910 1,8504 3,020 1,8705 3,100 1,9006 3,070 1,8807 3,010 1,8608 2,850 1,8409 2,620 1,70010 2,220 1,10011 2,230 1,30012 2,450 1,590Required1. 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.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
Related questions
Question
Cost Estimation; High-Low Method; MAPE 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 Maintenance Costs Machine Hours
1 $2,600 1,690
2 2,760 1,770
3 2,910 1,850
4 3,020 1,870
5 3,100 1,900
6 3,070 1,880
7 3,010 1,860
8 2,850 1,840
9 2,620 1,700
10 2,220 1,100
11 2,230 1,300
12 2,450 1,590
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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Recommended textbooks for you
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.