Use the information below to answer the following question(s).
The Barnett Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Barnett Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.
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-What is the cost function derived from using the high-low method?
A) y = $43,191 + $0.19x
B) y = $4,875 + $4.28x
C) y = $41,900 + $0.23x
D) y = $2,430 + $4.28x
E) y = -$4,875 + $5.25x

Question

Use the information below to answer the following question(s).
The Barnett Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Barnett Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.
‪ 
-What is the cost function derived from using the high-low method?
A) y = $43,191 + $0.19x 
B) y = $4,875 + $4.28x 
C) y = $41,900 + $0.23x 
D) y = $2,430 + $4.28x 
E) y = -$4,875 + $5.25x

Quizplus · Accepted Answer

b = ($44,160 - $24,900)/(9,750 - 5,250) = $4.28 for the highest and lowest values of the cost driver
$44,160 = a + ($4.28 × 9.750)
a = $2,430
Cost function is y = $2,430 + $4.28x

Use the Information Below to Answer the Following Question(s)