The Mortise Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Mortise has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. Month Cost Hours January $40,000 3,600 February 38,500 3,000 March 36,280 3,300 April 38,000 3,500 May 69,850 5,850 June 45,000 4,250 a. What is the slope coefficient? b. What is the constant for the estimated cost equation? c. What is the estimated cost function for the above data? d. What is the estimated total cost at an operating level of 3,100 hours?
The Mortise Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Mortise has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation. Month Cost Hours January $40,000 3,600 February 38,500 3,000 March 36,280 3,300 April 38,000 3,500 May 69,850 5,850 June 45,000 4,250 a. What is the slope coefficient? b. What is the constant for the estimated cost equation? c. What is the estimated cost function for the above data? d. What is the estimated total cost at an operating level of 3,100 hours?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The Mortise Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Mortise has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.
|
Month
|
Cost
|
Hours
|
|---|---|---|
|
January
|
$40,000
|
3,600
|
|
February
|
38,500
|
3,000
|
|
March
|
36,280
|
3,300
|
|
April
|
38,000
|
3,500
|
|
May
|
69,850
|
5,850
|
|
June
|
45,000
|
4,250
|
|
a.
|
What is the slope coefficient?
|
|
b.
|
What is the constant for the estimated cost equation?
|
|
c.
|
What is the estimated cost function for the above data?
|
|
d.
|
What is the estimated total cost at an operating level of
3,100
hours? |
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