Answer the following questions using the information below:
Presented below are the production data for the first six months of the year for the mixed costs incurred by Vertise Company.
$$\begin{array} { l r r }
\text { Month } & \text { Cost } & \text { Units } \
\text { January } & \$ 4,890 & 4,100 \
\text { February } & 4,426 & 3,520 \
\text { March } & 6,730 & 5,200 \
\text { April } & 9,724 & 8,250 \
\text { May } & 5,900 & 4,900 \
\text { June } & 7,336 & 6,600
\end{array}$$ Vertise Company uses the high-low method to analyze mixed costs.
-How would the cost function be stated?
A) y = $484 + $1.12X
B) y = $5,298 + $1.19X
C) y = $2,388 + $1.12
D) y = $7,850 + $1.18X

Question

Answer the following questions using the information below:
Presented below are the production data for the first six months of the year for the mixed costs incurred by Vertise Company.
 $$\begin{array} { l r r } 
\text { Month } & \text { Cost } & \text { Units } \
\text { January } & \$ 4,890 & 4,100 \
\text { February } & 4,426 & 3,520 \
\text { March } & 6,730 & 5,200 \
\text { April } & 9,724 & 8,250 \
\text { May } & 5,900 & 4,900 \
\text { June } & 7,336 & 6,600
\end{array}$$ Vertise Company uses the high-low method to analyze mixed costs.
-How would the cost function be stated?
A) y = $484 + $1.12X
B) y = $5,298 + $1.19X
C) y = $2,388 + $1.12
D) y = $7,850 + $1.18X

Quizplus · Accepted Answer

The high-low method uses the highest and lowest activity levels to estimate the variable cost per unit and the fixed cost. The highest cost is $9,724 for 8,250 units, and the lowest cost is $4,426 for 3,520 units. The variable cost per unit is ($9,724 - $4,426) / (8,250 - 3,520) = $1.12. The fixed cost is calculated using either the high or low point: $9,724 - ($1.12 * 8,250) = $484. Thus, the cost function is y = $484 + $1.12X.

Answer the Following Questions Using the Information Below: Presented Below

Answer the Following Questions Using the Information Below:
Presented Below