1. Howard, financial analyst at KMW Corporation, is examining the behavior of quarterly maintenance costs for budgeting...
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Question:
1.
Howard, financial analyst at KMW Corporation, is examining the behavior of quarterly maintenance costs for budgeting purposes. Howard collects the following data on machine hours worked and maintenance costs for the past five quarters.
Machine Hours | Maintenance Cost |
100,000 | $205,000 |
120,000 | 240,000 |
110,000 | 220,000 |
125,000 | 260,000 |
95,000 | 200,000 |
Required:
- Formulate the cost function from the quarterly data using the high-low and regression methods.
b)Estimate maintenance cost for next three quarters if the forecasted machine hours for the three quarters are 140,000, 80,000, and 170,000 respectively using the two method under „a‟
Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 9780135628478
17th Edition
Authors: Srikant M. Datar, Madhav V. Rajan
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