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Hope Company uses the high-low method to analyze the cost behavior. It has determined that the machine hour's best explain the company's utility cost.
Hope Company uses the high-low method to analyze the cost behavior. It has determined that the machine hour's best explain the company's utility cost. The company's relevant range varies from low 2,400 machines hours to a high of 4,000 machines hours, with the following data being available for the first six months of 2020 operation: Month January Machine hours Utility cost 2,550 P32,290 February 2,450 31,710 March 2,850 34,030 April 3,000 34,900 May 3,350 36,930 June 3,850 39,830 Required: (1) Using the high-low method, compute the fixed portion of utility cost and variable cost per unit. Express your answer in the equation y = a + bx. (5 points) (2) Using the least square regression method, compute the fixed portion of utility cost and variable cost per unit. Express your answer in the equation y = a + bx. (10 points) (3) Using your answer in (1) and (2), estimate the utility costs at 3,900 machine hours. (5 points) Month January Units Produced Mang Jose's inspection costs for 2020 are listed below: Maintenance Costs P 34,320 1190 February 1170 33,839 March 1130 32,877 April 1250 35,763 May 1520 42,256 June 1080 31,674 July 1200 34,560 August 1920 51,876 September 1650 45,383 October 1550 42,978 November 1500 41,775 December 1300 36,965 Using the (a) high-low method and (b) least square regression method, compute for (1) fixed costs and (2) variable costs per unit. State the result in an equation y = a + bx. [Note: 5 points for using high-low method and 10 points for using least square regression method.] Using your answers in (a) and (b), estimate the maintenance costs at 1,950 units produced. (5 points)
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