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Question - The Mortise Company has assembled the following data pertaining to certain costs that cannot be easily identified as either fixed or variable. Mortise has heard about a method of measuring cost functions called the high-low method and has decided to use it in this situation.
Month Cost Hours
January $40,000 3,600
February 38,500 3,000
March 36,280 3,300
April 38,000 3,500
May 69,850 5,850
June 45,000 4,250
1. What is the slope coefficient?
2. What is the constant for the estimated cost equation?
3. What is the estimated cost function for the above data?
4. What is the estimated total cost at an operating level of 3,100 hours?
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