Author Question: The Connors Company has assembled the following data pertaining to certain costs that cannot be ... (Read 138 times)

nenivikky · **on:** Mar 6, 2021

Question 1

Taunton Company uses the high-low method to estimate its cost function. The information for 2017 is provided below:

Machine-hours

Costs

Highest observation of cost driver 4,000 $332,000
Lowest observation of cost driver 3,000 $312,000

What is the estimated total cost when 1,900 machine-hours are used?
◦ $509,600
◦ $290,000
◦ $489,700
◦ $157,700

Question 2

The Connors Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Connors Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.

Cost Hours
$24,000 5,000
$26,100 6,300
$34,700 7,900
$48,000 11,000
$38,300 9,250

What is the cost function?
◦ y = $48,000 + $4.80X
◦ y = $24,000 + $4.36X
◦ y = $34,700 + $4.80X
◦ y = $4,000 + $4.00X

TheNamesImani · **Reply #1 on:** Mar 6, 2021

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