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Data Table Month August Miles Driven Delivery Costs 6,000 $ 4,100 11,000 $ 5,400 September Print Done The controller of the Stump Company is preparing
Data Table Month August Miles Driven Delivery Costs 6,000 $ 4,100 11,000 $ 5,400 September Print Done The controller of the Stump Company is preparing the budget for 2021 and needs to estimate a cost function for delivery costs. Information regarding delivery costs incurred in the prior 2 months are: (Click the icon to view the information.) Requirements 1. Estimate the cost function for delivery. 2. Can the constant in the cost function be used as an estimate of fixed delivery cost per month? Explain. Requirement 1. Estimate the cost function for delivery. Delivery costs = + ( Delivery costs = Requirement 2. Can the constant in the cost function be used as an estimate of fixed delivery cost per month? Explain. The cost function in requirement 1 is an estimate of how costs behave the relevant range, not at cost levels the relevant range. If there are no months with zero miles driven represented in the be used to estimate the fixed costs at the zero miles driven level. The constant component of the cost function provides the best available delivery cost account in the general ledger, data in that account starting point for a straight line that approximates how a cost behaves
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