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Please answer P6-2B on the image below using high-low analysis to create a cost formula P6-2B. Graphing Mixed Cost During the past operating year, Davenport
Please answer P6-2B on the image below using high-low analysis to create a cost formula
P6-2B. Graphing Mixed Cost During the past operating year, Davenport Corporation had the following monthly volume of production and total monthly maintenance expense: Units Produced Maintenance Expense Maintenance Expense $22,400 Units Produced 120,000 156,000 $22,800 26,600 23,400 27,200 26,400 26,800 July . . 154,000 128,000 25,400 August 26,800 September. 23,200 October 25,000 26,400 December 130,000 152,000 156,000 November. . . . June . . . 150,000 Required Assume that all volumes are in the relevant range. a. Explain why the data indicate that the maintenance expense is neither a fixed nor a variable expense b. Construct a graph similar to the one in Exhibit 6-7 and plot the maintenance expense data. c. Fit a line (by sight) to the cost observation points, and estimate the cost formula. d. Confirm your answer in requirement (c) with high-low analysis
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