Cost Estimation; Machine Replacement; Ethics Hardison Inc. manufactures glass for officebuildings in Florida. As a result of age and wear, a critical machine in the production process hasbegun to produce quality defects. Hardison is considering replacing the old machine with a newmachine, either brand A or brand B. The manufacturer has provided Hardison with the following dataon the costs of operation of each machine brand at various levels of output:Output(square yards)Brand AEstimated Total CostsBrand BEstimated Total Costs2,000 $ 97,000 $ 120,0004,000 125,000 160,0008,000 180,000 200,00016,000 225,000 260,00032,000 280,000 300,00064,000 438,000 368,000Required1. Graph the data for the two brands of machines.2. Use the high-low method to determine the cost equation for each brand of machine and use the results tocalculate the costs of operating each machine if Hardison’s output is expected to be 25,000 square yards
Cost Estimation; Machine Replacement; Ethics Hardison Inc. manufactures glass for office
buildings in Florida. As a result of age and wear, a critical machine in the production process has
begun to produce quality defects. Hardison is considering replacing the old machine with a new
machine, either brand A or brand B. The manufacturer has provided Hardison with the following data
on the costs of operation of each machine brand at various levels of output:
Output
(square yards)
Brand A
Estimated Total Costs
Brand B
Estimated Total Costs
2,000 $ 97,000 $ 120,000
4,000 125,000 160,000
8,000 180,000 200,000
16,000 225,000 260,000
32,000 280,000 300,000
64,000 438,000 368,000
Required
1. Graph the data for the two brands of machines.
2. Use the high-low method to determine the cost equation for each brand of machine and use the results to
calculate the costs of operating each machine if Hardison’s output is expected to be 25,000 square yards
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