Mr. Quik Printers
Mr. Quik Printers documented the number of copies it made for customers as well as total overhead costs for the past five months as follows:
$$\begin{array} { l c c }
& \text { Number of copies } & \text { Total overhead costs } \
\hline \text { October } & 230000 & \$ 7400 \
\text { November } & 240000 & 7500 \
\text { December } & 280000 & 8000 \
\text { January } & 265000 & 7700 \
\text { February } & 248000 & 7550
\end{array}$$
-Using the high/low method,what is the overhead cost equation?
A) Y = $400 + $.030x
B) Y = $4640 + $.012x
C) Y = $7630 + $.001x
D) Y = $5566 + $.008x

Question

Mr. Quik Printers
Mr. Quik Printers documented the number of copies it made for customers as well as total overhead costs for the past five months as follows:
$$\begin{array} { l c c } 
& \text { Number of copies } & \text { Total overhead costs } \
\hline \text { October } & 230000 & \$ 7400 \
\text { November } & 240000 & 7500 \
\text { December } & 280000 & 8000 \
\text { January } & 265000 & 7700 \
\text { February } & 248000 & 7550
\end{array}$$
-Using the high/low method,what is the overhead cost equation?
A) Y = $400 + $.030x
B) Y = $4640 + $.012x
C) Y = $7630 + $.001x
D) Y = $5566 + $.008x

Quizplus · Accepted Answer

The high/low method takes the highest and lowest levels of activity and uses them to calculate the variable cost per unit. 
Using the information in the problem, we can calculate the variable cost per unit:
($11,000 - $8,000) / (10,000 - 5,000) = $3,000 / 5,000 = $0.60
This means that for every unit of activity (in this case, for every mile driven), the variable cost is $0.60.
Next, we can use either the high or low data point to calculate the fixed cost. Using the high point:
$11,000 = $0.60(10,000) + Fixed Cost
$11,000 = $6,000 + Fixed Cost
Fixed Cost = $11,000 - $6,000 = $5,000
Therefore, the overhead cost equation is Y = $5,000 + $0.60x, which matches choice B.

Mr Quik Printers Mr -Using the High/low Method,what Is the Overhead Cost Equation? A)

Mr Quik Printers
Mr -Using the High/low Method,what Is the Overhead Cost Equation?
A)