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Using account analysis, what is the accountant's estimate of total fixed costs for December? Using account analysis, what is the accountant's estimate of variable costs
Using account analysis, what is the accountant's estimate of total fixed costs for December?
Using account analysis, what is the accountant's estimate of variable costs per unit for December?
Using the high-low method, what is the accountant's estimate of total fixed costs for December?
Using the high-low method, what is the accountant's estimate of total variable costs for December?
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 clean and vacuum the inside. Workers are managed by a single supervisor Lorenzo's accountant wants to estimate total costs in December, when 11,150 cars are expected to be washed. She uses two different methods to estimate total December 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 June, when 10,400 cars were washed. The following are June total costs and her fixed cost estimates: Cost Item Soap, cloths, and supplies Water Car wash labor Power for conveyor Supervisor and cashier Total Cost $3,120 $5,200 $26,580 $11,480 $4,000 Fixed Portion $0 $0 $2,660 $2,120 $4,000 For the high-low method, she developed cost function parameter estimates by using the actual costs in April and May, when 8,700 and 11,800 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 April $4,350 $2,610 $25,890 $11,200 $4,600 $48,650 May $5,900 $3,540 $34,260 $14,300 $4,600 $62,600 TotalStep by Step Solution
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