Quantum Company uses the high-low method to estimate the cost function.The information for 2017 is provided below:

What is the constant for the estimated cost equation?
A)$12,000
B)$16,000
C)$20,000
D)$32,000

Question

Quantum Company uses the high-low method to estimate the cost function.The information for 2017 is provided below:

What is the constant for the estimated cost equation?
A)$12,000 
B)$16,000 
C)$20,000 
D)$32,000

Quizplus · Accepted Answer

Slope ($32,000 - $16,000)/ ($1,000 - 200)= $20.00
Using highest observation: Constant = $32,000 − ($20.00 × 1,000 hours)= $12,000
OR: Using lowest observation: Constant = $16,000 − ($20.00 × 200 hours)= $12,000

Quantum Company Uses the High-Low Method to Estimate the Cost