Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 39

Cost Estimation, High-Low Method Albedo Inc. manufactures high-end replacement telescope lenses for amateur and professional astronomers that are seeking to upgrade the performance of their telescopes. You have just become employed as a staff accountant at Albedo and Jordan Coleman, the controller, has asked you to help with maintenance cost estimation for the lens manufacturing process. You review the manufacturing process and decide that the best cost driver for maintenance costs is machine-hours. These data are from the previous fiscal year for maintenance expense and machine-hours:

Month	Maintenance Cost	Machine-Hours
1	$3,210	2,750
2	4,650	3,900
3	5,175	4,050
4	3,350	2,690
5	3,100	2,500
6	2,950	2,580
7	2,900	2,300
8	2,900	2,500
9	4,120	3,160
10	4,350	3,325
11	3,500	2,780
12	3,775	3,000

Required What is the cost equation for maintenance cost using the high-low method?

Step 1 of 3

High Low Method:

In the High Low Method, first selecting the highest and lowest levels of activity from the given data set.