ABC company incurred the following maintainance costs during the past 6 months Table 1 Months Machine...

ABC company incurred the following maintainance costs during the past 6 months
Table 1
Months Machine hours Cost $
1 20 4560
2 40 9780
3 50 10920
4 60 11280
5 30 6320
6 90 18920
7 25 5140
8 43 10500
9 70 12400

REQUIRED
Part 1
A. Use the data on Table 1 , estimate the variable and fixed cost of the company
using the high and low method
B. Develop a cost function for the company.
C. Estimate the maintenance cost if 120 machine hours were used in July
Part 2
1. Use a scattergraph and the two points that seem to best represent the relationship
between cost and activity levels of 900 and 300 machine hours. Use these two
points , estimate the variable cost and the fixed cost [ components of maintenance
costs]
2. Develop a cost function that the company can use to estimate maintenance cost at
different volume levels
3. Estimate maintenance costs for July if the company expects to use 2800 machine
hours

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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