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Month Pizza Production Costs (RM) Number of Pizzas Produced 1 30,800 13,300 42,100 15,400 3 33,400 12,600 4 33,000 -12,500 5 36,600 14,800 31,200 9,800 7 30,400 9,800 8 34,100 10,200 9. 41,300 14,700 10 27,560 8,400 All computations are to be rounded up to its nearest 2 decimal points. Required: a. Use the high-low method to estimate the fixed and variable portions of overhead costs based on number of pizzas produced. b. What is the estimated total variable cost for a month in which 5,000 pizzas are produced? c. CPSB has heard that the high-low method has a major limitation compared to simple regression. What is it?

Month Pizza Production Costs (RM) Number of Pizzas Produced 1 30,800 13,300 42,100 15,400 3 33,400 12,600 4 33,000 -12,500 5 36,600 14,800 31,200 9,800 7 30,400 9,800 8 34,100 10,200 9. 41,300 14,700 10 27,560 8,400 All computations are to be rounded up to its nearest 2 decimal points. Required: a. Use the high-low method to estimate the fixed and variable portions of overhead costs based on number of pizzas produced. b. What is the estimated total variable cost for a month in which 5,000 pizzas are produced? c. CPSB has heard that the high-low method has a major limitation compared to simple regression. What is it?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 8E: Melchar Company uses 78,125 pounds of oats each year. The cost of placing an order is 18, and the...
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CPSB wishes to estimate the committed (fixed) and variable costs per pizza production and had collected the following data from the accounting record:

Month Pizza Production Costs (RM) Number of Pizzas Produced 1 30,800 13,300 2 42,100 15,400 3 33,400 12,600 33,000 -12,500 36,600 14,800 31,200 9,800 7 30,400 9,800 8 34,100 10,200 41,300 14,700 10 27,560 8,400 All computations are to be rounded up to its nearest 2 decimal points. Required: a. Use the high-low method to estimate the fixed and variable portions of overhead costs based on number of pizzas produced. b. What is the estimated total variable cost for a month in which 5,000 pizzas are produced? CPSB has heard that the high-low method has a major limitation compared to simple regression. What is it? с.
Transcribed Image Text:Month Pizza Production Costs (RM) Number of Pizzas Produced 1 30,800 13,300 2 42,100 15,400 3 33,400 12,600 33,000 -12,500 36,600 14,800 31,200 9,800 7 30,400 9,800 8 34,100 10,200 41,300 14,700 10 27,560 8,400 All computations are to be rounded up to its nearest 2 decimal points. Required: a. Use the high-low method to estimate the fixed and variable portions of overhead costs based on number of pizzas produced. b. What is the estimated total variable cost for a month in which 5,000 pizzas are produced? CPSB has heard that the high-low method has a major limitation compared to simple regression. What is it? с.
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