The White Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. White Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.

How is the cost function stated?
A) y = $34,500 + $9.90X
B) y = $69,300 + $8.70X
C) y = $34,800 + $11.50X
D) y = $8,400 + $8.70X

Question

The White Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. White Company has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.

How is the cost function stated?

How is the cost function stated?
A) y = $34,500 + $9.90X 
B) y = $69,300 + $8.70X 
C) y = $34,800 + $11.50X 
D) y = $8,400 + $8.70X

Quizplus · Accepted Answer

b = ($69,300 - $34,500) / (7,000 - 3,000) = $8.70
$69,300 = a + ($8.70 × 7,000)
a = $8,400

The White Company Has Assembled the Following Data Pertaining to Certain