Albedo Inc. manufactures high-end replacement telescope lenses for amateur and p

Question

Albedo Inc. manufactures high-end replacement telescope lenses for amateur and professional astronomers who 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 labor hours. The data below are from the previous fiscal year for maintenance expense and labor hours Month Maintenance Cost Labor Hours $3,115 5,140 4,280 4,510 3,800 3,540 4,100 3,900 4,670 3,140 4,950 3,280 2,650 4,270 3,730 3,900 3,370 3,100 3,660 3,440 4,080 2,840 4,240 2,940 2 4 5 12 Required What is the cost equation for maintenance cost using the high-low method? (Round "constant" to nearest whole dollar. Round "slope" to 2 decimal places. Negative amounts should be indicated by a minus sign.) Maintenance cost

Explanation / Answer

Maintenance cost Labor hours High level 5140 4270 Low level 3115 2650 Change 2025 1620 Slope=2025/1620= $1.25 Constant=5140-(4270*1.25)= -198 Maintenance cost=-198+(1.25x)

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