question archive The following data relating to units shipped and total shipping expense have been assembled by Archer Company, a wholesaler of large, custom-built air-conditioning units for commercial buildings: Units Total Shipping Month Shipped Expense January
Subject:AccountingPrice:2.86 Bought8
The following data relating to units shipped and total shipping expense have been assembled by Archer
Company, a wholesaler of large, custom-built air-conditioning units for commercial buildings:
Units Total Shipping
Month Shipped Expense
January . . . . . . . . 3 $1,800
February. . . . . . . . 6 $2,300
March. . . . . . . . . . 4 $1,700
April . . . . . . . . . . . 5 $2,000
May . . . . . . . . . . . 7 $2,300
June . . . . . . . . . . . 8 $2,700
July. . . . . . . . . . . . 2 $1,200
Required:
a. Using the high-low method, estimate a cost formula for shipping expense.
Estimated cost for shipping expenses = 250x +700
Step-by-step explanation
First, we need to identify the highest activity cost and the lowest activity cost to solve the high and low method based on the formula.
Highest activity cost - 8 units for $2,700
Lowes activity cost - 2 units for 1,200
Then we follow the formula:
Then afterwards we will estimate the cost formula by using the computed amounts:
Estimated cost for shipping expenses = 250x +700
where x = units shipped.
Please see the attached file for the complete solution