Solution-What was the accountant estimate of total fixed

What was the accountant estimate of total fixed costs

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Question - Mears Production Company makes several products and sells them for an average price of $90. Mears' accountant is considering two different approaches to estimating the firm's total monthly cost function, account analysis and high-low. In both cases, she used units of production as the independent variable. For the account analysis approach, she developed the cost function by analyzing each cost item in June, when production was 1,850 units. The following are the results of that analysis:

Cost Item	Total Cost	Fixed Cost	Variable Cost
Direct materials	$6,660	$0	$6,660
Direct labor	$9,250	$0	$9,250
Factory overhead	$9,505	$3,030	$6,475
Selling expenses	$5,190	$3,340	$1,850
Administrative expenses	$3,150	$3,150	$0
Total expenses	$33,755	$9,520	$24,235

For the high-low method, she developed the cost function using the same data from June and data from August, when production was 2,500 units and total costs were $43,443. After developing the two cost functions, the accountant used them to make predictions for the month of October, when production was expected to be 2,300 units.

REQUIRED - Using the high-low method, what was the accountant's estimate of total fixed costs for October?

Reference no: EM132125897

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What was the accountant estimate of total fixed costs : Mears Production Company makes several products and sells them for an average price of $90. What was the accountant's estimate of total fixed costs for October

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What was the accountant estimate of total fixed costs

Reference no: EM132125897

Reference no: EM132125897

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