
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The computer in May’s office is down, and May has been asked to immediately provide an equation to estimate the future purchase cost for part #696. May grabs a calculator and uses the high-low method to estimate a cost equation. What equation does she get?

Transcribed Image Text:May Blackwell is the new manager of the materials storeroom for Clayton
Manufacturing. May has been asked to estimate future monthly purchase costs for part #696, used in two of
Clayton's products. May has purchase cost and quantity data for the past 9 months as follows:
Quantity Purchased
2,710 parts
2,810
4,153
3,756
2,912
3,387
3,622
2,298
3,562
Cost of Purchase
$12,675
Month
January
February
13,000
17,653
15,825
13,125
13,814
15,300
10,233
14,950
March
April
May
June
July
August
September
Estimated monthly purchases for this part based on expected demand of the two products for the rest of the
year are as follows:
Purchase Quantity Expected
3,340 parts
3,710
3,040
Month
October
November
December
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