The Managers of the Production Department Have Decided to Use

question 117

Essay

The managers of the production department have decided to use the production levels of 2018 and 2019 as examples of the highest and lowest years of operating levels.During 2018 the department used 280,000 litres of chemicals and during 2019 it used 240,000 litres.The department's costs for 2018 were $460,000, but only $400,000 in 2019.Required:
Using the high-low method determine the cost estimating equation for the department if litres of direct material are used as the cost driver?

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Definitions:

Patriotic Feelings

A sense of national pride and loyalty towards one's country.

Union and Confederacy

Terms associated with the American Civil War, with the Union referring to the northern states that opposed slavery, and the Confederacy to the southern states that seceded to preserve it.

Second American Revolution

The transformation of American government and society brought about by the Civil War.

Bill of Rights

The first ten amendments to the United States Constitution, guaranteeing certain rights and freedoms to American citizens.