The Mac Davis Company specializes in the purchase, renovation, and resale of older homes. Mac employs several carpenters and painters to do the work for him. It is essential for him to have accurate cost estimates so he can determine total renovation costs before he purchases a piece of property. If estimated renovation costs plus the purchase price of a house are higher than the house's estimated resale value, it is not a worthwhile investment. Mac has been using the home's interior square feet for his exterior paint cost estimations. Recently he decided to include the number of external openings-the total number of doors and windows in a house-as a cost driver. Their cost is significant because they require time-consuming preparatory work and careful brushwork. The rest of the house usually is painted either by rollers or spray guns, which are relatively efficient ways to apply paint to a large area. Mac has kept careful records of these exterior painting costs on his last 12 jobs:
The Mac Davis Company specializes in the purchase, renovation, and resale of older homes. Mac employs several carpenters and painters to do the work for him. It is essential for him to have accurate cost estimates so he can determine total renovation costs before he purchases a piece of property. If estimated renovation costs plus the purchase price of a house are higher than the house's estimated resale value, it is not a worthwhile investment. Mac has been using the home's interior square feet for his exterior paint cost estimations. Recently he decided to include the number of external openings-the total number of doors and windows in a house-as a cost driver. Their cost is significant because they require time-consuming preparatory work and careful brushwork. The rest of the house usually is painted either by rollers or spray guns, which are relatively efficient ways to apply paint to a large area. Mac has kept careful records of these exterior painting costs on his last 12 jobs:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Required information
[The following information applies to the questions displayed below.]
The Mac Davis Company specializes in the purchase, renovation, and resale of older homes. Mac employs several
carpenters and painters to do the work for him. It is essential for him to have accurate cost estimates so he can determine
total renovation costs before he purchases a piece of property. If estimated renovation costs plus the purchase price of a
house are higher than the house's estimated resale value, it is not a worthwhile investment.
Mac has been using the home's interior square feet for his exterior paint cost estimations. Recently he decided to include
the number of external openings-the total number of doors and windows in a house-as a cost driver. Their cost is
significant because they require time-consuming preparatory work and careful brushwork. The rest of the house usually is
painted either by rollers or spray guns, which are relatively efficient ways to apply paint to a large area. Mac has kept
careful records of these exterior painting costs on his last 12 jobs:
House Square Feet
2,500
3,010
2,800
2,850
4,600
5556SAENTE
8
9
10
11
12
2,700
2,600
2,550
2,600
3,700
2,650
3,560
External
Openings
13
15
12
12
19
13
Required 1 Required 2
11
11
10
16
13
16
Costs
$ 2,810
3,742
3,100
3,150
4,700
3,225
2,920
2,836
3,242
4,112
3,210
3,975
Required:
1. Using the high-low cost estimation technique and square feet as the independent variable, determine the cost of painting a 3,300-
square-foot house with 14 external openings. Also determine the cost for a 2,400-square-foot house with 8 external openings.
2. Using the high-low cost estimation technique and number of external openings as the independent variable, determine the cost of
painting a 3,300-square-foot house with 14 external openings.
Complete this question by entering your answers in the tabs below.
Using the high-low cost estimation technique and number of external openings as the independent variable, determine the
cost of painting a 3,300-square-foot house with 14 external openings.
Indicate the high and low point for an analysis based on openings:
Predicted total cost for a 3,300 square foot house with 14 openings
< Required 1
Home 5/Home 9
Required 2 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F70218199-4005-49f0-a47b-9909de777322%2F842c247c-d482-4c2d-9a40-c5d58abd7477%2F90qly1n_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
The Mac Davis Company specializes in the purchase, renovation, and resale of older homes. Mac employs several
carpenters and painters to do the work for him. It is essential for him to have accurate cost estimates so he can determine
total renovation costs before he purchases a piece of property. If estimated renovation costs plus the purchase price of a
house are higher than the house's estimated resale value, it is not a worthwhile investment.
Mac has been using the home's interior square feet for his exterior paint cost estimations. Recently he decided to include
the number of external openings-the total number of doors and windows in a house-as a cost driver. Their cost is
significant because they require time-consuming preparatory work and careful brushwork. The rest of the house usually is
painted either by rollers or spray guns, which are relatively efficient ways to apply paint to a large area. Mac has kept
careful records of these exterior painting costs on his last 12 jobs:
House Square Feet
2,500
3,010
2,800
2,850
4,600
5556SAENTE
8
9
10
11
12
2,700
2,600
2,550
2,600
3,700
2,650
3,560
External
Openings
13
15
12
12
19
13
Required 1 Required 2
11
11
10
16
13
16
Costs
$ 2,810
3,742
3,100
3,150
4,700
3,225
2,920
2,836
3,242
4,112
3,210
3,975
Required:
1. Using the high-low cost estimation technique and square feet as the independent variable, determine the cost of painting a 3,300-
square-foot house with 14 external openings. Also determine the cost for a 2,400-square-foot house with 8 external openings.
2. Using the high-low cost estimation technique and number of external openings as the independent variable, determine the cost of
painting a 3,300-square-foot house with 14 external openings.
Complete this question by entering your answers in the tabs below.
Using the high-low cost estimation technique and number of external openings as the independent variable, determine the
cost of painting a 3,300-square-foot house with 14 external openings.
Indicate the high and low point for an analysis based on openings:
Predicted total cost for a 3,300 square foot house with 14 openings
< Required 1
Home 5/Home 9
Required 2 >
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