Using Activity Analysis,Arnoldson Company Has Identified the Appropriate Cost Driver

question 126

Essay

Using activity analysis,Arnoldson Company has identified the appropriate cost driver for maintenance costs in a factory as the number of machine hours.The maintenance costs have been observed as follows within the relevant range of 5,000 to 8,000 machine-hours.
$\begin{array}{lll}\text { Month }&\text { Maintenance Cost }&\text { Machine Hours }\\\text { January } & \$ 7,900 & 5,600 \\\text { February } & \$ 8,500 & 7,100 \\\text { March } & \$ 7,400 & 5,000 \\\text { April } & \$ 8,200 & 6,500 \\\text { May } & \$ 9,100 & 7,300 \\\text { Iune } & \$ 9,800 & 8,000 \\\text { July } & \$ 7,800 & 6,200\end{array}$
Required:
1.Estimate the cost function using the high-low method.
2.If you were going to use the visual-fit method to estimate the cost function,what steps will you take?

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Definitions:

Nonverbal Punishers

Non-spoken methods used to discourage or suppress certain behaviors, often through negative body language or facial expressions.

Punishment

A consequence applied with the intent of reducing or eliminating an undesired behavior.

Employee Initiative

The ability and willingness of employees to take action and make decisions without explicit instruction or prompting from management.

Flexibility

The quality of being adaptable or variable, capable of changing or being modified according to circumstances.