MaeveMaeve BakerBaker is the new manager of the materials storeroom for ParrParr Manufacturing. MaeveMaeve has been asked
Question:
MaeveMaeve
BakerBaker
is the new manager of the materials storeroom for
ParrParr
Manufacturing.
MaeveMaeve
has been asked to estimate future monthly purchase costs for part #696, used in two of
ParrParr's
products.
MaeveMaeve
has purchase cost and quantity data for the past 9 months as follows:
Month | Cost of Purchase | Quantity Purchased |
---|---|---|
January | $12,687 | 2,660 parts |
February | 12,990 | 2,810 |
March | 17,763 | 4,153 |
April | 16,011 | 3,724 |
May | 13,094 | 3,001 |
June | 13,814 | 3,387 |
July | 15,322 | 3,622 |
August | 10,251 | 2,275 |
September | 14,930 | 3,502 |
Estimated monthly purchases for this part based on expected demand of the two products for the rest of the year are as follows:
Month | Purchase Quantity Expected |
October | 3,390 parts |
---|---|
November | 3,720 |
December | 3,010 |
Requirement 1. The computer in
MaeveMaeve's
office is down, and
MaeveMaeve
has been asked to immediately provide an equation to estimate the future purchase cost for part #696.
MaeveMaeve
grabs a calculator and uses thehigh-low method to estimate a cost equation. What equation does she get?
= | + ( | × | ) |
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan