The Controller of Fortnight Co Using the High-Low Method to Develop a Cost Estimating Equation,the

question 127

Multiple Choice

The controller of Fortnight Co.has requested a quick estimate of the manufacturing supplies needed for the Cleveland Plant for the month of July,when production is expected to be 470,000 units to meet the ending inventory requirements and sales of 475,000 units.Fortnight Co.'s budget analyst has the following actual data for the last three months.
$$\begin{array} { | l | r | r | } \hline \text { Month } & \text { Procuction in Units } & \text { Manufacturing Supplies } \\\hline \text { March } & 450,000 & \$ 723,060 \\\hline \text { April } & 540,000 & 863,560 \\\hline \text { May } & 480,000 & 766,560 \\\hline\end{array}$$
Using the high-low method to develop a cost estimating equation,the estimate of needed manufacturing supplies for July would be: (CMA adapted)

• A) $681,500.
• B) $688,750.
• C) $749,180.
• D) $752,060.

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Definitions:

Non-Operating Gains

Income from activities not related to a company's core operations such as profits from investments, property sales, or currency exchange.

Retirement of Notes Payable

The process of paying off or settling a debt obligation represented by promissory notes.

Cash Flows from Operating Activities

The section of a company's cash flow statement that represents the amount of money a company brings in from its regular business activities.

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life, representing the asset's wear and tear, deterioration, or obsolescence.