Question
Horton Manufacturing Inc. produces blinds and other window treatments for residential homes and offices. The owner is concerned about the maintenance costs for the production
Horton Manufacturing Inc. produces blinds and other window treatments for residential homes and offices. The owner is concerned about the maintenance costs for the production machinery, as maintenance costs for the previous fiscal year were higher than he expected. The owner has asked you to assist in estimating future maintenance costs to better predict the firms profitability. Together, you have determined that the best cost driver for maintenance costs is machine hours. The data from the previous fiscal year for maintenance expense and machine hours follow:
Month | Expense | Hours | Month | Expense | Hours | |||||
1 | $2,965 | 1,864 | 7 | $2,620 | 1,526 | |||||
2 | 2,840 | 1,415 | 8 | 2,550 | 1,431 | |||||
3 | 2,880 | 1,845 | 9 | 2,585 | 1,467 | |||||
4 | 2,865 | 1,782 | 10 | 2,700 | 1,542 | |||||
5 | 2,915 | 1,809 | 11 | 2,590 | 1,446 | |||||
6 | 2,775 | 1,681 | 12 | 2,555 | 1,448 | |||||
Required: |
What is the cost equation for maintenance cost using the high-low method? (Graph the data points to check for outliers. Round "constant" to nearest whole dollar. Round "slope (unit variable cost)" to 4 decimal places.) 1.
Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1. (Do not round intermediate calculations, with the exception of MAPE for each month, which should be rounded to three decimal places. Input your final answer as a whole percentage rounded to 1 decimal place 2. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started