**Albedo Incorporated** manufactures high-end replacement telescope lenses for amateur and professional astronomers looking to upgrade the performance of their telescopes. As a newly employed staff accountant at Albedo, you have been asked by the controller, Jordan Coleman, to assist in estimating maintenance costs for the lens manufacturing process. Machine hours are identified as the best cost driver for maintenance costs. Below is the data from the previous fiscal year concerning maintenance costs and machine hours:| **Month** | **Maintenance Costs** | **Machine Hours** ||-----------|-----------------------|-------------------|| 1 | $3,210 | 2,750 || 2 | $4,650 | 3,900 || 3 | $5,175 | 4,050 || 4 | $3,350 | 2,690 || 5 | $3,100 | 2,500 || 6 | $2,950 | 2,580 || 7 | $2,900 | 2,300 || 8 | $2,900 | 2,500 || 9 | $4,120 | 3,160 || 10 | $4,350 | 3,325 || 11 | $3,500 | 2,780 || 12 | $3,775 | 3,000 |### Required:1. What is the cost equation for maintenance costs using the high-low method? (Round "slope (unit variable cost)" to 2 decimal places. Negative amounts should be indicated by a minus sign.)**Explanation of Data Analysis:**The table presents monthly maintenance costs and machine hours over a fiscal year to help calculate the cost equation using the high-low method. This involves identifying the highest and lowest activity levels, calculating the variable cost per unit, and determining the total fixed costs to develop a cost equation. This method assumes a linear relationship between the activity level and costs.

VARIABLE COST Variable Cost is a cost that varies with the level of output.Variable costs include…

Answered: Required: 1. What is the cost equation…

Required: 1. What is the cost equation for maintenance costs using the high-low method? (Round "slope (unit variable cost)" to 2 decimal places. Negative amounts should be indicated by a minus sign.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Break-even analysis can help compare locations on the basis of factors that are expressed in terms…

A: Introduction: Break-even analysis stands as a critical tool for businesses assessing the financial…

Q: a) What effect does an increase in volume on each of the following: 1) Unit fixed costs 2) Unit…

A: Fixed Cost In a simple term fixed cost which describe as cost which was incurred in the entity which…

Q: In describing the cost formula equation, Y = a +bX, which of the following is correct: Multiple…

A: Lets understand the basics.High low method as the name suggest consider highest level of activity…

Q: When Total Contribution magrin equals total fixed costs, this indicates operating income True…

A: If the contribution margin is equal to the total fixed cost that means it a situation of the…

Q: Required: Complete the following table: Note: Round your answers to 2 decimal places. Product A Unit…

A: MARGINAL COSTING INCOME STATEMENT Marginal Costing Income Statement is One of the Important Cost…

Q: Which cost driver would you recommend Cooper use going forward? a)Actual MOH B) Fixed MOH C)DM…

A: Activity-Based Costing (ABC) is a method of cost accounting that allocates the overhead costs among…

Q: How is the break-even point calculated? a. Fixed Costs / Contribution Margin Ratio b. Sales /…

A: Lets understand the basics.Break even point is a point at which no profit no loss condition arise.…

Q: The slope of the total cost line represents the ___________ cost per unit. a. Fixed b. Variable c.…

A: Variable costs are costs that vary with the change in the level of output whereas fixed costs are…

Q: How would the equation for total costs be written using the following? y = total costs v =…

A: Variable costs are costs that change with change in volume of production . Whereas, Fixed costs…

Q: Classification of costs, manufacturing sector. Fill in the following table by putting an X in th…

A: Material:Nature: Material costs refer to the cost of raw materials, components, or goods that are…

Q: Apart from the basic costs to build up a unit rate, explain FIVE other factors you will consider in…

A: Usually, the price is estimated by the estimators in context of building a firm. The basic cost that…

Q: re mixed costs treated? Answer:

A: Mixed Cost - Mixed cost is the combination of two categories of costs, namely fixed and variable…

Q: 1. Multiple-Choice Question - FIFO When using FIFO, A) Identical costs go to the balance sheet and…

A: FIFO is one of the inventory valuation method being used in business. FIFO means first in first out.…

Q: Overhead Cost Area Admin and General Info and Telecomm Sales and Marketing Utilities Prop Maint…

A: Overheads means all type of indirect costs being incurred in business. These costs can not be…

Q: Overhead costs produced increases. as the number of units Select one: a. increase steadily b.…

A: The question asks how overhead costs change as the number of units produced increases.Generally…

Q: The last part of my original question was cut off. I needed the cost per unit and total gross margin…

A: Workings:

Q: Assume markup percentage equals desired profit divided by total costs. What is the correct…

A: The mark-up amount of the profit is the amount which has been added on the cost so that the profit…

Q: Within a relevant range, costs that increase in direct proportion to volume are: Question 9…

A: Variable costs are proportional to the level of output within a relevant range. On the other hand,…

Q: Some of the information found on a detail inventory card for Sheffield Inc. for the first month of…

A: The weighted average cost method of inventory calculates the average cost of all items in stock,…

Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

**Albedo Incorporated** manufactures high-end replacement telescope lenses for amateur and professional astronomers looking to upgrade the performance of their telescopes. As a newly employed staff accountant at Albedo, you have been asked by the controller, Jordan Coleman, to assist in estimating maintenance costs for the lens manufacturing process. Machine hours are identified as the best cost driver for maintenance costs. Below is the data from the previous fiscal year concerning maintenance costs and machine hours:

| **Month** | **Maintenance Costs** | **Machine Hours** |
|-----------|-----------------------|-------------------|
| 1 | $3,210 | 2,750 |
| 2 | $4,650 | 3,900 |
| 3 | $5,175 | 4,050 |
| 4 | $3,350 | 2,690 |
| 5 | $3,100 | 2,500 |
| 6 | $2,950 | 2,580 |
| 7 | $2,900 | 2,300 |
| 8 | $2,900 | 2,500 |
| 9 | $4,120 | 3,160 |
| 10 | $4,350 | 3,325 |
| 11 | $3,500 | 2,780 |
| 12 | $3,775 | 3,000 |

### Required:

1. What is the cost equation for maintenance costs using the high-low method? (Round "slope (unit variable cost)" to 2 decimal places. Negative amounts should be indicated by a minus sign.)

**Explanation of Data Analysis:**

The table presents monthly maintenance costs and machine hours over a fiscal year to help calculate the cost equation using the high-low method. This involves identifying the highest and lowest activity levels, calculating the variable cost per unit, and determining the total fixed costs to develop a cost equation. This method assumes a linear relationship between the activity level and costs.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introducing High Low Method

VIEW

Step 2: Calculate the Variable Cost Per Unit Using High Low Method

VIEW

Step 3: Calculate the Differnce cost at each level of activity Using High Low Method

VIEW

Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Follow-up Questions

Read through expert solutions to related follow-up questions below.

Follow-up Question

Graph the data and comment on whether or not there are potential outliers.

Solution

by Bartleby Expert

SEE SOLUTION

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

please help me number it from 1-5
Each incorrect answer cancels out each correcr one. Indicate which of the following statements are true(T) or false (F). Indirect costs are those factors whose increase or decrease is not related to changes in the activity, so that in the short term they must be considered fixed.Cost Accounting studies the resources or productive factors applied to production, so it requires data expressed in physical units (hours, Kilograms, liters etc...) in addition to their monetary value.The fuel consumed by commercial venicles must be assigned as indirect manufacturing cost. This is because it is not possible to do it directly. The warehousing costs refer to the set of activities related to the management of purchases and warehouses, and do not include the acquisition value of this materials.When 50.000 units are produced, the fixed cost is $10 per unit. Therefore, when 100.000 units are produced fixed costs will remain at $10 per unit.The budgeted allocation rate is calculated by dividing the…
The high-low method used in determining costs can be used to estimate the cost queation using just two points of reference True False
Which of the following statements is CORRECT with respect to fixed costs per unit? Select one: A. They will decrease as production decreases. B. They will remain the same as production levels change. C. They will increase as production increases. D. They will increase as production decreases.
Consider the following statements: (1) Total costs will equal the sum of fixed and variable costs. (2) Total costs will equal the sum of direct and indirect costs. Which of these statements is/are correct? A. 2 only OB. 1 only OC. Neither 1 nor 2 OD. 1 and 2
When using the high-low method to estimate costs, the formula “Change in Cost divided by Change in Units” (or “Change in Total Cost divided by Change in Activity Level”) is used to estimate the: Fixed cost per unit Mixed cost per unit Profit per unit Indirect cost per unit Variable cost per unit Differential cost per unit Opportunity cost per unit
CM ratio = 1 ______ the Variable expense ratio. minus plus divided by multiplied by
Which of the following summarizes the weighted average cost flow assumption? Weighted average assumes that costs flow in the reverse order incurred. O Weighted average assumes that cost flow is allocated by the physical weight of items purchased. O Weighted average assumes that costs flow at an average of the costs available. O Weighted average assumes that costs flow in the order incurred.
Show how each of these costs will behave as the volume of activity decreases. Variable cost per unit Total variable cost Fixed cost per unit Total fixed cost A. Increase B. Decrease C. Remains the same
PLEASE ANSWER PO AND SHOW SOLUTION
On a graph, if a horizontal axis represents units of production and the vertical axis represents total costs, the total variable costs line would be shown as a(n): Question 4 options: horizontal line. vertical line. upward sloping line. downward sloping line.
A graph of which of the following types of costs would have a slope of zero? Total variable cost . Variable cost per unit. Total cost Fixed cost per unit