Horton Manufacturing Incorporated produces blinds and other window treatments for residential homes and offices. The owner is concerned about the maintenance costs for the production machinery because maintenance costs for the previous fiscal year were higher than he expected. The owner has asked you to assist in estimating future maintenance costs to better predict the firm's profitability. Together, you have determined that the best cost driver for maintenance costs is machine hours. The data from the previous fiscal year for maintenance costs and machine hours follow: Month Maintenance Costs Machine Hours 1 $ 2,700 2 2,745 2,795 2,895 2,930 3,030 2,940 2,980 2,855 2,645 2,665 2,965 4 5 6 7 8 B9DL2 10 11 12 Required: 1. Use the high-low method to estimate the fixed and variable portions for maintenance costs. (In your calculations, round "slope (unit variable cost)" to 4 decimal places. Enter the "slope (unit variable cost)" rounded to 4 decimal places and all other calculations, to nearest whole dollar.) Maintenance cost 1,629 1,740 1,755 1,805 1,800 1,895 1,820 1,855 1,845 1,485 1,700 1,500 $ 1,251 + ($ 0.9390 x M = Machine Hours |)
Horton Manufacturing Incorporated produces blinds and other window treatments for residential homes and offices. The owner is concerned about the maintenance costs for the production machinery because maintenance costs for the previous fiscal year were higher than he expected. The owner has asked you to assist in estimating future maintenance costs to better predict the firm's profitability. Together, you have determined that the best cost driver for maintenance costs is machine hours. The data from the previous fiscal year for maintenance costs and machine hours follow: Month Maintenance Costs Machine Hours 1 $ 2,700 2 2,745 2,795 2,895 2,930 3,030 2,940 2,980 2,855 2,645 2,665 2,965 4 5 6 7 8 B9DL2 10 11 12 Required: 1. Use the high-low method to estimate the fixed and variable portions for maintenance costs. (In your calculations, round "slope (unit variable cost)" to 4 decimal places. Enter the "slope (unit variable cost)" rounded to 4 decimal places and all other calculations, to nearest whole dollar.) Maintenance cost 1,629 1,740 1,755 1,805 1,800 1,895 1,820 1,855 1,845 1,485 1,700 1,500 $ 1,251 + ($ 0.9390 x M = Machine Hours |)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:nces
Horton Manufacturing Incorporated produces blinds and other window treatments for residential homes and offices. The owner is
concerned about the maintenance costs for the production machinery because maintenance costs for the previous fiscal year
were higher than he expected. The owner has asked you to assist in estimating future maintenance costs to better predict the
firm's profitability. Together, you have determined that the best cost driver for maintenance costs is machine hours. The data from
the previous fiscal year for maintenance costs and machine hours follow:
Month Maintenance Costs Machine Hours
1
$ 2,700
2
2,745
3
7
8
69042
10
11
12
2,795
2,895
2,930
3,030
2,940
2,980
2,855
2,645
2,665
2,965
Maintenance cost
1,629
1,740
1,755
1,805
1,800
1,895
1,820
1,855
1,845
1,485
1,700
1,500
Required:
1. Use the high-low method to estimate the fixed and variable portions for maintenance costs. (In your calculations, round "slope
(unit variable cost)" to 4 decimal places. Enter the "slope (unit variable cost)" rounded to 4 decimal places and all other
calculations, to nearest whole dollar.)
1,251 + ($
0.9390 x M = Machine Hours
1)
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