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Mears Production Company makes several products and sells them for an average price of $70. Mears' accountant is considering two different approaches to estimating the
Mears Production Company makes several products and sells them for an average price of $70. Mears' accountant is considering two different approaches to estimating the firm's total monthly cost function, 1) account analysis, and 2) high-low. In both cases, she used units of production as the independent variable. For the account analysis approach, she developed the cost function by analyzing each cost item in June, when production was 1,800 units. The following are the results of that analysis: Cost Item Total Cost Variable Cost Fixed Cost Direct materials $7,740 $7,740 $0 Direct labor 59,360 $0 $9,360 55,580 Factory overhead $8,760 $3,180 Selling expenses $5,300 52,160 $3,140 Administrative expenses $3,800 $0 $3,800 Total expenses $34,960 $24,840 $10,120 For the high-low method, she developed the cost function using the data from June above and data from August, when production was 2,350 units and total costs were $43,401. After developing the two cost functions, the accountant used them to make predictions for the month of October, when production was expected to be 2,200 units. REQUIRED (ROUND UNIT COSTS TO THE NEAREST CENT AND TOTAL COSTS TO THE NEAREST DOLLAR.] Part A (5 tries; 5 points) 1. Using account analysis, what was the accountant's estimate of total fixed costs for October? 10120 This answer is correct. correct. 2. Using account analysis, what was the accountant's estimate of total variable costs for October? 30360 This answer You are correct. Your receipt no. is 161-1949 Previous Tries Part B (5 tries; 5 points) 5 ; ) 1. Using the high-low method, what was the accountant's estimate of total fixed costs for October? This answer is incorrect. 15.35 This answer is correct. . 2. Using the high-low method, what was the accountant's estimate of variable costs per unit for October? Submit Answer Incorrect. Tries 1/5 Previous Tries
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