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Exercise 6-23 Approximating a Curvilinear Cost; Public School District (LO 6-10, 6-2, 6-3@) The behavior of the annual maintenance and repair cost in the Bus
Exercise 6-23 Approximating a Curvilinear Cost; Public School District (LO 6-10, 6-2, 6-3@) The behavior of the annual maintenance and repair cost in the Bus Transportation Department of the Summerset Public School District is shown by the solid line in the following graph. The dashed line depicts a semivariable-cost approximation of the department's repair and maintenance cost. Monthly repair and maintenance cost A $4,000 $3,000 $2,000 $1,000 10 20 30 40 50 60 70 80 90 10 Page 259 Required: 1. What is the actual (curvilinear) and estimated (semivariable) cost shown by the graph for each of the following activity levels? Actual Estimated a. 20,000 miles b. 40,000 miles c. 60,000 miles d. 90,000 miles 2. How good an approximation does the semivariable-cost pattern provide if the department's relevant range is 40,000 to 60,000 miles per month? What if the relevant range is 20,000 to 90,000 miles per month
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