Question
Ginsburg and Company has provided you with the following data: Month Supervision Cost Labor Hours Machine Hours January $27,500 2,400 5,040 February 28,500 2,560 5,300
Ginsburg and Company has provided you with the following data:
Month | Supervision Cost | Labor Hours | Machine Hours |
January | $27,500 | 2,400 | 5,040 |
February | 28,500 | 2,560 | 5,300 |
March | 32,540 | 3,360 | 6,600 |
April | 30,000 | 2,880 | 6,500 |
May | 32,630 | 3,300 | 6,750 |
Required:
a) Use the high-low method to estimate Ginsburg's monthly fixed supervision cost and the unit variable cost of supervision as a function of labor hours (i.e. use labor hours as the measure of activity). Estimate the supervision cost for the month of June if the expected number of labor hours and machine hours for the month of June are 4,000 and 6,000 respectively.
b) Use the high-low method to estimate Ginsburg's monthly fixed supervision cost and the unit variable cost of supervision as a function of machine hours (i.e. use machine hours as the measure of activity). Estimate the supervision cost for the month of June if the expected number of labor hours and machine hours for the month of June are 4,000 and 6,000 respectively.
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