Exercise 5-35 (Algo) Methods of Estimating Costs: High-Low, Ethical Issues (LO 5-4) Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years. Number of Visitors per Year(thousands) Maintenance Costs ($000) 1,850 $ 3,025 2,030 3,322 2,500 4,000 Required: a. Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor. b. The company expects a record 2,400,000 visitors next year. What would be the estimated maintenance costs?
Exercise 5-35 (Algo) Methods of Estimating Costs: High-Low, Ethical Issues (LO 5-4) Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years. Number of Visitors per Year(thousands) Maintenance Costs ($000) 1,850 $ 3,025 2,030 3,322 2,500 4,000 Required: a. Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor. b. The company expects a record 2,400,000 visitors next year. What would be the estimated maintenance costs?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 5-35 (Algo) Methods of Estimating Costs: High-Low, Ethical Issues (LO 5-4)
Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years.
| Number of Visitors per Year(thousands) | Maintenance Costs ($000) |
||||
| 1,850 | $ | 3,025 | |||
| 2,030 | 3,322 | ||||
| 2,500 | 4,000 | ||||
Required:
a. Use the high-low method to estimate the fixed cost of maintenance annually and the variable cost of maintenance per visitor.
b. The company expects a record 2,400,000 visitors next year. What would be the estimated maintenance costs?
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