Statler Corporation wants to find an equation to estimate some of their monthly operating costs for the operating budget for 2021. The following cost and other data were gathered for 2020: (Click the icon to view the cost and other data) Read the requirements. Requirement 1. Which of the preceding costs is variable? Fixed? Mixed? Explain. Cost function Mixed Fixed Variable Cost Maintenance Health insurance Shipping costs Requirement 2. Using the high-low method, determine the cost function for each cost. Begin by selecting the general formula that represents the linear cost function for each cost. Maintenance y = a +bx Health insurance Shipping costs Explanation The cost neither remains constant in total nor remains constant per unit. Although the cost driver varies from month to month, the total cost remains constant. The cost per unit remains constant each month. y=a y= bX y= y= y= Now determine the cost function for each cost. (Enter all values in the same format as the general linear formula. If an input field is not used in the Cost function Maintenance Health insurance Shipping costs 5230 + 2x per machine hour per employee per unit shipped Data table Month January February March April May June July August September October November December Maintenance Costs $ $ $ $ $ $ $ $ $ $ $ $ $ 22,968 $ 18,792 61 83 98 107 88 91 89 84 Machine Health Number of Shipping Units Hours Insurance Employees Costs Shipped 4,570 160 $ 8,560 $ 20,677 7,130 4.430 115 $ 8,560 $ 24,012 8,280 4,680 227 $ 8,560 7,920 4,830 306 $ 8,560 6,480 5,195 464 $ 8.560 5,890 4,751 276 $ 8,560 4,912 348 $ 8,560 4,932 368 $ 8,560 8,560 8,560 8,560 8,560 $ 17,081 $ 26,854 9,260 $ 25,346 8,740 8,460 $ 24,534 $ 19,662 6,780 $ 20,793 7,170 5,033 423 $ 5,211 470 $ 5,230 515 $ 4,751 274 $ 97 113 90 93 $ 16,327 5,630 $ 28,014 9,660 Print Done
Statler Corporation wants to find an equation to estimate some of their monthly operating costs for the operating budget for 2021. The following cost and other data were gathered for 2020: (Click the icon to view the cost and other data) Read the requirements. Requirement 1. Which of the preceding costs is variable? Fixed? Mixed? Explain. Cost function Mixed Fixed Variable Cost Maintenance Health insurance Shipping costs Requirement 2. Using the high-low method, determine the cost function for each cost. Begin by selecting the general formula that represents the linear cost function for each cost. Maintenance y = a +bx Health insurance Shipping costs Explanation The cost neither remains constant in total nor remains constant per unit. Although the cost driver varies from month to month, the total cost remains constant. The cost per unit remains constant each month. y=a y= bX y= y= y= Now determine the cost function for each cost. (Enter all values in the same format as the general linear formula. If an input field is not used in the Cost function Maintenance Health insurance Shipping costs 5230 + 2x per machine hour per employee per unit shipped Data table Month January February March April May June July August September October November December Maintenance Costs $ $ $ $ $ $ $ $ $ $ $ $ $ 22,968 $ 18,792 61 83 98 107 88 91 89 84 Machine Health Number of Shipping Units Hours Insurance Employees Costs Shipped 4,570 160 $ 8,560 $ 20,677 7,130 4.430 115 $ 8,560 $ 24,012 8,280 4,680 227 $ 8,560 7,920 4,830 306 $ 8,560 6,480 5,195 464 $ 8.560 5,890 4,751 276 $ 8,560 4,912 348 $ 8,560 4,932 368 $ 8,560 8,560 8,560 8,560 8,560 $ 17,081 $ 26,854 9,260 $ 25,346 8,740 8,460 $ 24,534 $ 19,662 6,780 $ 20,793 7,170 5,033 423 $ 5,211 470 $ 5,230 515 $ 4,751 274 $ 97 113 90 93 $ 16,327 5,630 $ 28,014 9,660 Print Done
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Statler Corporation wants to find an equation to estimate some of their monthly operating costs for the operating budget for 2021. The following cost and other data were gathered for 2020:
(Click the icon to view the cost and other data)
Read the requirements.
Requirement 1. Which of the preceding costs is variable? Fixed? Mixed? Explain.
Cost
function
Mixed
Fixed
Variable
Cost
Maintenance
Health insurance
Shipping costs
Requirement 2. Using the high-low method, determine the cost function for each cost.
Begin by selecting the general formula that represents the linear cost function for each cost.
y = a +bX
y = a
y = bX
Maintenance
Health insurance
Shipping costs
Now determine the cost function for each cost. (Enter all values in the same format as the general linear formula. If an input field is not used in the
Cost function
Maintenance
Explanation
The cost neither remains constant in total nor remains constant per unit.
Although the cost driver varies from month to month, the total cost remains constant.
The cost per unit remains constant each month.
Health insurance
Shipping costs
y =
y =
y =
5230
+
+
2x per machine hour
per employee
per unit shipped
Data table
Month
January
February
March
April
May
June
July
August
September
October
November
December
GA
Maintenance Machine Health
Costs
Hours Insurance
4,570 160 $ 8,560
4,430 115 $ 8,560
4,680
227
8,560
4,830 306
8,560
5,195 464
8,560
4,751 276
8,560
4,912 348 $ 8,560
4,932 368 $ 8,560
5,033 423
8,560
5,211 470
8,560
5,230 515
8,560
8,560
4,751 274
Print
Number of
Employees
61
83
98
107
88
91
89
84
97
113
90
93
Done
Shipping Units
Costs Shipped
$ 20,677 7,130
$ 24,012 8,280
22,968 7,920
18,792 6,480
17,081
26,854
25,346
$ 24,534
$
$
$
5,890
9,260
8,740
8,460
6,780
7,170
5,630
$ 19,662
$ 20,793
16,327
28,014
$
9,660
SA
X
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