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    High Low Method

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    Denver Manufacturing would like to do a better job budgeting for maintenance costs and, consequently, they have prepared a schedule showing maintenance costs and units produced for the past five months as follows:
    Number of units produced
    Total maintenance costs

    January -------------
    4,400
    $4,200

    February -----------
    6,800
    5,400

    March --------------
    4,900
    4,500

    April ----------------
    5,600
    4,900

    May -----------------
    6,000
    5,490

    Using the high/low method, what is the cost equation to predict total maintenance costs?

    Y = $2,000 + $.50x

    Y = $2,400 + $.50x

    Y = $4,200 + $.40x

    Y = $4,200 + $.50x

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    https://brainmass.com/business/accounting/high-low-method-100873

    Solution Preview

    In the high low method we use the highest and the lowest values
    Type Units Cost
    High 6,800 ...

    Solution Summary

    The solution explains the use of high low method in estimating the cost function.

    $2.19

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