Debra and Gary met with the supervisor of the pizza division of a medium-sized Italian food...

   

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Debra and Gary met with the supervisor of the pizza division of a medium-sized Italian food supplier. The supervisor explained the two key costs in his division, as follows. Cost Type Each pizza MOH Number of Units 2,250 2,250 Total $11,700 $3,375 Although Debra and Gary used this data to estimate a model for the division's costs, they each came up with a different model, as follows. Debra's cost model Gary's cost model Total pizza division cost = $5.20 (number of pizzas) + $3,375 Total pizza division cost = $6.70 (number of pizzas) What understanding did Debra have about the cost behavior of these costs? What understanding did Gary have about the cost behavior of these two costs? Recognizing that these were the only two pieces of data they had, which method of cost estimation did they likely use? Debra and Gary met with the supervisor of the pizza division of a medium-sized Italian food supplier. The supervisor explained the two key costs in his division, as follows. Cost Type Each pizza MOH Number of Units 2,250 2,250 Total $11,700 $3,375 Although Debra and Gary used this data to estimate a model for the division's costs, they each came up with a different model, as follows. Debra's cost model Gary's cost model Total pizza division cost = $5.20 (number of pizzas) + $3,375 Total pizza division cost = $6.70 (number of pizzas) What understanding did Debra have about the cost behavior of these costs? What understanding did Gary have about the cost behavior of these two costs? Recognizing that these were the only two pieces of data they had, which method of cost estimation did they likely use?

Answer rating: 100% (QA)

1 Debras cost model suggests that she believes the total cost of the pizza division is made up of two components a variable cost per pizza and a fixed cost component In her model she assumes that the ... View the full answer