Determine the cost formula for maintenance costs

Assignment Help Accounting Basics
Reference no: EM131128495

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
4,000 ..................$1,470
7,000 .................. 1,200
3,500 .................. 1,680
6,000 .................. 1,100
3,000 .................. 1,960
9,000 .................. 880
8,000 .................. 1,020
5,500 .................. 1,200

a. Using the high-low method, determine the cost formula for maintenance costs with machine hours as the basis for estimation.

b. What aspect of the estimated equation is bothersome? Provide an explanation for this situation.

c. Within the relevant range, can the formula be reliably used to predict maintenance costs? Can the a and b values in the cost formula be interpreted as fixed and variable costs? Why or why not?

Reference no: EM131128495

Questions Cloud

Promoted and received a substantial raise : 1. LO.1 Kelly recently was promoted and received a substantial raise. She talks to her tax adviser about the potential tax ramifications. After making some projections, her adviser "welcomes her to the AMT club."
What are the characteristics of the planets : In general, what are the characteristics of the planets that have been found so far around other stars
Chance of succeeding in generating additional revenue : What are at least five new product ideas that could really increase new revenue for Wendy's Fast Food Restaurant? Out of the ideas you list which one do you think would really have the best chance of succeeding in generating additional revenue and no..
Label all of the catalytic mechanisms : Below is a diagram of the reaction catalyzed by the enzyme papain (a cysteine protease). Label all of the catalytic mechanisms at work at each step.
Determine the cost formula for maintenance costs : 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.
Identify an ethical issue within this case study : For this Assignment, review the case study in the text, "Guerrilla Government in EPA's Seattle Regional Office." Identify an ethical issue within this case study. Consider the competing obligations and responsibilities that these individuals faced..
Disadvantage of the online survey method : Which of the following is true of marketing research? Qualitative research is likely to prove most efficient when the research objective is to: The categorization and coding of data is part of the theory development process in qualitative data analys..
What would be the value of total manufacturing cost : Which of the following account would be credited, when goods are returned to suppliers? What would be the value of total manufacturing cost, if the cost of material consumed during the month is Rs. 5,000, labor cost incurred is Rs. 2,000 and the fact..
How many times more light the telescope collects : Collecting light via area. In a dark environment, the opening in your eye enlarges to 8 mm in diameter. An 8 meter diameter telescope collects much more light than your eye. Calculate how many times more light the telescope collects than your eye

Reviews

Write a Review

 

Accounting Basics Questions & Answers

  Determining amount of interest expense

The bonds mature on January 1, 2019. Solo paid $50,000 in bond issue costs. Solo uses straight-line amortization. The amount of interest expense for the year is:

  Alam company is a manufacturing firm that uses job-order

alam company is a manufacturing firm that uses job-order costing. at the beginning of the year the companys inventory

  Shares of common stock concepts

Harry purchased one share of common stock in a computer company for $90. Shortly after he purchased it, the corporation distributed two new shares of common stock for each share held. What is his basis for each of the three shares of common stock?

  Meower corp. received a charter authorizing

Meower Corp. received a charter authorizing 120,000 shares of common stock at $15 par value per share. During the first year of operations, 40,000 shares were sold at $28 per share. 600 shares were issued in payment of a current operating debt ..

  These transactions related to metro bus which provides

these transactions related to metro bus which provides transportation services to residents of chester county. metro

  Company a a us company has asubsidiary located in country z

company a a us company has asubsidiary located in country z where various forms of bribery areaccepted and expected. to

  Determine which data relate to which companies

Based on these financial data and your knowledge and assumptions about the nature of the businesses that the companies operate, determine which data relate to which companies.

  Adverse selection problems increased in prominence

Adverse selection problems increased in prominence in the 1980s - as deregulation required savings and loans and mutual savings banks to be more cautious.

  How much are newco inc.s earning and profits

NEWCO Inc. had current earnings and profits of $50,000 when it made a nonliquidating distribution to an individual shareholder of land that NEWCO Inc. held for use in its business.

  Input the formulas need to calculate margin turnover roi

input the formulas need to calculate margin turnover roi and residual income.check your worksheet by changing the

  On june 1 the cash account balance was 96750 during june

on june 1 the cash account balance was 96750. during june cash receipts totaled 305000 and the june 30 balance was

  Debt and equity features

Proceeds from an issue of debt securities having stock warrants should NOT be allocated between debt and equity features when

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd