Feno Menn, the owner of Phenomeno’s Pizza, wishes to estimate the committed and variable costs per

(LO 3) / pizza production. Feno collected the following data a the accounting hand we Piva Number of Pizzas i Month Production Costs Produced

| ts BerOee e s $28,560 8,600 L—

£1 loo. DESbo 2 aoe eeeae ae 31,400 9,800

: _ I2SY5 Bc dla e ee wt 33,200 12,600 lS$2Q0e - ba GGeo Ae ee en ee 32,800 12,500

; Dea 5 Sore PAU RN REE ERE 36,500 14,800

= th4e 6 41,100 15,200 B UI)

a) Fs (i G KX / ¢ f ) aes BOO RAMOUAMOOONO C0 JOR RUC CAO IOM DOC 3 :

[.49 ae Wie Tip ee2e, e ee 30,200 9,800

=< Yio —- 2ZSsso CG IY fs 34,000 10,200

= 2200 Fe care cl plied eee, 41,200 14,700 OC atas senegaaremeaens ceeony aetno nn 30,900 13,300 Rea 900 4-49 (Ohi

a. Use the high-low method to estimate the committed and variable portions of overhead costs based on number of pizzas produced.

—”)S 20

b. What is the estimated total variable cost for a month in whi 4,000 pizzas are produced?

c. Feno has heard that the high-low method has a major limitation compared to simple regression.

What is it?