The Controller of Joy Co Has Requested a Quick Estimate

question 27

Multiple Choice

The controller of Joy Co has requested a quick estimate of the manufacturing supplies needed for the Morton 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.Joy Co's budget analyst has the following actual data for the last three months. 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:

Average Variable Cost

The per unit cost of production excluding fixed costs, calculated by dividing the total variable costs by the quantity of output produced.

Short-Run Production

The period in which at least one input or factor of production is fixed, allowing firms to adjust only certain inputs to change output levels.

Average Total Cost

The total cost of production (fixed and variable costs) divided by the total quantity of output produced.

Marginal Cost

The additional cost incurred in the production of one extra unit of a good or service.