Patrick Ross, the President of M & M Materials Company

question 90

Essay

Patrick Ross, the president of M & M Materials Company, has asked for information about the cost behavior of manufacturing overhead costs. Specifically, he wants to know how much overhead cost is fixed and how much is variable. The following data are the only records available:

Required:
Using the high-low method, determine the overhead cost equation. Use machine-hours as your cost driver.

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Definitions:

Proximity

The state, quality, or fact of being close or near in space, time, or relationship.

Complementarity

A concept in relationships that suggests a higher degree of satisfaction when partners' characteristics or behaviors complement each other well.

Reciprocity

A social rule where if someone gives you something, you feel an obligation to give something back.

Propinquity

Refers to the physical or psychological proximity between people that often leads to friendship or other relationships.