Chapter 10, Problem 10.25E

Account analysis, high-low. Stein Corporation wants to find an equation to estimate some of their monthly operating costs for the operating budget for 2018. The following cost and other data were gathered for 2017:

1. 1. Which of the preceding costs is variable? Fixed? Mixed? Explain.

Required

1. 2. Using the high-low method, determine the cost function for each cost.
2. 3. Combine the preceding information to get a monthly operating cost function for the Stein Corporation.
3. 4. Next month, Stein expects to use 400 machine hours, have 80 employees, and ship 9,000 units. Estimate the total operating cost for the month.