Exercise 2-16A (Algo) Estimating fixed and variable costs using the high-low method LO 2-6 Rooney Boat Company makes inexpensive aluminum fishing boats. Production is seasonal, with considerable activity occurring in spring and summer. Sales and production tend to decline in the fall and winter months. During year 2, the high point in activity occurred in June when it produced 206 boats at a total cost of $159,150. The low point in production occurred in January when it produced 35 boats at a total cost of $48,000. Required a. Use the high-low method to estimate the amount of fixed cost incurred each month by Rooney Boat Company. b. Determine the total estimated cost if 140 boats are made.
Exercise 2-16A (Algo) Estimating fixed and variable costs using the high-low method LO 2-6 Rooney Boat Company makes inexpensive aluminum fishing boats. Production is seasonal, with considerable activity occurring in spring and summer. Sales and production tend to decline in the fall and winter months. During year 2, the high point in activity occurred in June when it produced 206 boats at a total cost of $159,150. The low point in production occurred in January when it produced 35 boats at a total cost of $48,000. Required a. Use the high-low method to estimate the amount of fixed cost incurred each month by Rooney Boat Company. b. Determine the total estimated cost if 140 boats are made.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Exercise 2-16A (Algo) Estimating fixed and variable costs using the high-low method LO 2-6
Rooney Boat Company makes inexpensive aluminum fishing boats. Production is seasonal, with considerable activity occurring in the
spring and summer. Sales and production tend to decline in the fall and winter months. During year 2, the high point in activity
occurred in June when it produced 206 boats at a total cost of $159,150. The low point in production occurred in January when it
produced 35 boats at a total cost of $48,000.
Required
a. Use the high-low method to estimate the amount of fixed cost incurred each month by Rooney Boat Company.
b. Determine the total estimated cost if 140 boats are made.
a. Fixed cost
b. Total estimated cost
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