Answered: than Manufacturing Incorporated…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 9EA: The cost data for Evencoat Paint for the year 2019 is as follows: Using the high-low method, express...

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Question

Ethan Manufacturing Incorporated produces floor mats for automobiles. The owner, Joseph Ethan, has asked you to assist in estimating maintenance costs. Together, you and Joseph determine that the single best cost driver for maintenance costs is machine hours. These data are from the previous fiscal year for maintenance costs and machine hours:

1. What is the cost equation for maintenance costs using the high-low method?

2. Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1.

Month	Maintenance Costs	Machine Hours
1	$ 2,660	1,750
2	2,820	1,830
3	2,970	1,910
4	3,080	1,930
5	3,160	1,960
6	3,130	1,940
7	3,070	1,920
8	2,910	1,900
9	2,680	1,760
10	2,280	1,160
11	2,290	1,360
12	2,510	1,650

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