Question

La Mia’s Casas builds replicas of residences of famous and infamous people. The company is highly automated, and the new accountant-owner has decided to use machine hours as the basis for predicting maintenance costs. The following data are available from the company’s most recent eight months of operations:

Machine Hours	Maintenance Costs
7,200	$2,646
12,600	2,160
6,300	3,024
10,800	1,980
5,400	3,528
16,200	1,584
14,400	1,836
9,900	2,160

a. Using the high-low method, develop the equation for predicting weekly receiving report costs based on the number of shipments received.

Total cost = $         + $      X

b. Indicate whether each of the following statements is true or false based on the results of part (a).

(1) Results indicate that as machine hours increase, maintenance cost decreases.

(2) The components of fixed and variable costs are unclear.
(3) Based on the data provided, the equation in part (a) functions correctly.

Answer 1

Please find the attached solution.

Please like if you find it helpful.

Thank you?