The Controller of Joy Co Has Requested a Quick Estimate

question 45

Multiple Choice

The controller of Joy Co has requested a quick estimate of the manufacturing supplies needed for July when production is expected to be 470,000 units.Below are actual data from the prior three months of operations:
$\begin{array}{|l|r|r|}\hline & \text { Production in units } & \text { Manufacturing supplies } \\\hline \text { March } & 450,000 & \$ 723,060 \\\hline \text { April } & 540,000 & 853,560 \\\hline \text { May } & 480,000 & 766,560 \\\hline\end{array}$
Using these data and the high-low method,what is the best estimate of the cost of manufacturing supplies that would be needed for July? (Assume that this activity is within the relevant range.)

• A) $752,060.
• B) $755,196.
• C) $805,284.
• D) $1,188,756.

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Definitions:

Cost Method

An accounting method for investment, where the investment is recorded at cost and is adjusted for dividends received, rather than market value fluctuations.

Investment Account

An account held at a financial institution that contains securities, cash, and other investments owned by the account holder.

Net Income

The profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Dividends

Payments made by a corporation to its shareholders, typically from earnings, as a distribution of profits.