Andrea Company manufactures and sells specialty items. The following representative direct labor-hours and production costs are provided for a four-month period:
a = fixed production costs per month
b = variable production costs per direct labor hour
n = number of months
X = direct labor-hours per month
Y = total monthly production costs
Using the symbols above, indicate the cost estimation equation based on number of direct labor hours per month, and calculate total monthly production costs for May using the high-low method, assuming the direct labor hours for May are expected to be 2,250.

Question

Andrea Company manufactures and sells specialty items. The following representative direct labor-hours and production costs are provided for a four-month period:
  a = fixed production costs per month
b = variable production costs per direct labor hour
n = number of months
X = direct labor-hours per month
Y = total monthly production costs
Using the symbols above, indicate the cost estimation equation based on number of direct labor hours per month, and calculate total monthly production costs for May using the high-low method, assuming the direct labor hours for May are expected to be 2,250.

Quizplus · Accepted Answer

The Answer of Andrea Company manufactures and sells specialty items. The following representative direct labor-hours and production costs are provided for a four-month period:
  a = fixed production costs per month
b = variable production costs per direct labor hour
n = number of months
X = direct labor-hours per month
Y = total monthly production costs
Using the symbols above, indicate the cost estimation equation based on number of direct labor hours per month, and calculate total monthly production costs for May using the high-low method, assuming the direct labor hours for May are expected to be 2,250.

Andrea Company Manufactures and Sells Specialty Items