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Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787 Exercise 30
HIGH-LOW METHOD TO DETERMINE FIXED COST AND VARIABLE RATE
Suenos Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders.
The controller for Suenos Manufacturing ran regression on the above data, and the coefficients shown by the regression program (rounded to the nearest cent) are:
Required:
1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate.
2. If Suenos Manufacturing Company estimates that next month will have 430 purchase orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar.)
3. What if Suenos Manufacturing wants to estimate purchasing cost for the coming year and expects 5,340 purchase orders? What will estimated total purchasing cost be? (Round your answer to the nearest dollar.) What is the total fixed purchasing cost? Why doesn't it equal the fixed cost calculated in Requirement 1 above?
Suenos Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders.
The controller for Suenos Manufacturing ran regression on the above data, and the coefficients shown by the regression program (rounded to the nearest cent) are:
Required:
1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate.
2. If Suenos Manufacturing Company estimates that next month will have 430 purchase orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar.)
3. What if Suenos Manufacturing wants to estimate purchasing cost for the coming year and expects 5,340 purchase orders? What will estimated total purchasing cost be? (Round your answer to the nearest dollar.) What is the total fixed purchasing cost? Why doesn't it equal the fixed cost calculated in Requirement 1 above?
Explanation
Verified
Verified
1. In the method of Regression S manufac...
Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
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