Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required information [The following information applies to the questions displayed below.] The controller of Chittenango Chain Company believes that the identification of the variable and

Required information

[The following information applies to the questions displayed below.] The controller of Chittenango Chain Company believes that the identification of the variable and fixed components of the firms costs will enable the firm to make better planning and control decisions. Among the costs the controller is concerned about is the behavior of indirect-materials cost. She believes there is a correlation between machine hours and the amount of indirect materials used.

A member of the controllers staff has suggested that least-squares regression be used to determine the cost behavior of indirect materials. The regression equation shown below was developed from 40 pairs of observations. S = $200 + $9H

where S = Total monthly cost of indirect materials

H = Machine hours per month

  1. The high and low activity levels during the past four years, as measured by machine hours, occurred during April and August, respectively. Data concerning machine hours and indirect-materials usage follow.

April August
Machine hours 1,050 820
Indirect materials:
Beginning inventory $ 1,350 $ 2,100
Ending inventory 1,900 4,100
Purchases 7,000 7,300

Determine the cost of indirect materials used during April and August.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

How To Audit ISO 9001 2015 A Handbook For Auditors

Authors: Chad Kymal

1st Edition

087389927X, 978-0873899277

More Books

Students also viewed these Accounting questions

Question

1. Plan in advance how and when you will test.

Answered: 1 week ago

Question

c. What groups were least represented? Why do you think this is so?

Answered: 1 week ago

Question

7. Describe phases of multicultural identity development.

Answered: 1 week ago