Okafor Company manufactures skis. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected.MonthLease cost Machine hoursApril$21,000550 May 16,500420 June 19,000510 July 22,230570What would Okafor Company's cost formula be to estimate the cost of leasing within the relevant range?

Develop an equation for costs of leasing using the high-low method of cost estimation.

Answered: Okafor Company manufactures skis. The…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Okafor Company manufactures skis. The management accountant wants to calculate the fixed and variable costs associated with the leasing of machinery. Data for the past four months were collected.

Month	Lease cost	Machine hours
April	$21,000	550
May	16,500	420
June	19,000	510
July	22,230	570

What would Okafor Company's cost formula be to estimate the cost of leasing within the relevant range?

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