Wyoming wholesale has gathered the following data on the

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Reference no: EM13600561

Wyoming wholesale has gathered the following data on the number of shipments recieving reports for the fisrt seven weeks of 2010.

number of shipments recieved --------- weekly of receiving reports

50 ----------------------------------------------- $ 175
44-------------------------------------------------- 162

40---------------------------------------------------154

35---------------------------------------------------142
53---------------------------------------------------185
58---------------------------------------------------200
60---------------------------------------------------202

a. using the high- low method, determined the cost formula for maintenance cost with machine hours as the basis for estimation.
b. What aspect of the estimated equation is bothersome? provide an explanation for this situation.
c. Within the relevant range, can the formula be reliably used to predict maintenance cost? can the A. and B. values in the cost formula be interpreted as fixed and variable cost? Why or why not?

Reference no: EM13600561

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