Answered: a) Estimate the fixed cost and variable…

Business

Accounting

a) Estimate the fixed cost and variable cost using the high-low method.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 23E: Variable cost method of product pricing Based on the data presented in Exercise 17, assume that...

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

• Assume you run a bakery and you sell tarts. Below
are the monthly data
# tarts sold | total costs
Jan 500
$500
Feb 350
$430
Mar 380
$470
Apr 540
$560
May 310
$320
Jun 360
$450
a) Estimate the fixed cost and variable cost using the
high-low method.
b) What are the fixed cost and variable cost using the
Regression method? What is the R square? In this
example, can you give ONE potential explanation why R
square is not 1?

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