The managers of the production department have decided to use the production levels of 2019 and 2020 as examples of the highest and lowest years of operating levels.Data for those years are as follows:
Required:
Using the high-low method, determine the overhead cost equation for the department if litres of chemicals are used as the cost driver?
Definitions:
Physical Assets
Tangible objects or properties owned by an individual or business that have intrinsic value, such as machinery, buildings, or land.
Price Level
The comprehensive average of current prices for goods and services in the economic sector.
World War II
A global conflict that lasted from 1939 to 1945, involving most of the world's nations, including all of the great powers, eventually forming two opposing military alliances: the Allies and the Axis.
Nominal Interest Rate
The interest rate expressed in dollars of current value (that is, not adjusted for inflation) as a percentage of the amount loaned; the interest rate specified on the loan agreement.
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