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.

What is the estimated total cost at an operating level of 9,000 hours?
A) $34,200
B) $38,200
C) $41,400
D) $37,800

Question

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.

What is the estimated total cost at an operating level of 9,000 hours?

What is the estimated total cost at an operating level of 9,000 hours?
A) $34,200 
B) $38,200 
C) $41,400 
D) $37,800

Quizplus · Accepted Answer

b = ($42,000 - $23,000) / (10,000 - 5,000) = $3.80 for the highest and lowest values of the cost driver
$42,000 = a + ($3.80 × 10,000)
a = $4,000
Cost function is Y = $4,000 + $3.80X
Y = $4,000 + ($3.80 × 9,000)
Y = $38,200

The Connors Company Has Assembled the Following Data Pertaining to Certain