Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Lorenzo operates a brushless car wash. Incoming cars are put on an automatic, continuously moving conveyor belt. A car is washed as the conveyor belt
Lorenzo operates a brushless car wash. Incoming cars are put on an automatic, continuously moving conveyor belt. A car is washed as the conveyor belt carries it from the start station to the finish station. After the car moves off the conveyor belt, workers dry it and dlean and vacuum the inside. Workers are managed by a single supervisor. Lorenzo's accountant wants to estimate total costs in October, when 9,350 cars are expected to be washed. She uses two different methods to estimate total October costs, account analysis and high-low, with number of cars washed as the independent variable for both methods. For the account analysis method, she developed cost function parameter estimates by analyzing actual costs in February, when 8,200 cars were washed. The following are February total costs and her variable cost estimates: Cost Item Soap, cloths, and supplies Water Car wash labor Power for conveyor Supervisor and cashier Total Cost $4,920 $3,280 $23,340 $9,810 $4,000 Variable Portion $4,920 $3,280 $21,320 $7,380 $0 For the high-low method, she developed cost function parameter estimates by using the actual costs in July and August, when 8,300 and 11,000 cars were washed, respectively. The following are total costs for those two months: Cost Item Soap, cloths, and supplies Water Car wash labor Power for conveyor Supervisor and cashier July $2,490 $2,490 $22,850 $10,170 $3,700 $41,700 August $3,300 $3,300 $29,600 $12,600 $3,700 $52,500 Total REQUIRED [ROUND PER-UNIT COSTS TO THE NEAREST CENT AND TOTAL COSTS TO THE NEAREST DOLLAR. Part A [6 tries; 5 points] 1. Using account analysis, what is the accountant's estimate of total fixed costs for October? 2. Using account analysis, what is the accountant's estimate of variable costs per unit for October
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