FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Use the high-low method to compute the cost function relating customer-service costs to the number of service reports.

Lacy Dallas is examining customer-service costs in
the southern region of Camilla Products. Camilla Products has more than 200 separate electrical products
that are sold with a 6-month guarantee of full repair or replacement with a new product. When a product is
returned by a customer, a service report is prepared. This service report includes details of the problem and
the time and cost of resolving the problem. Weekly data for the most recent 8-week period are as follows:
Week
Customer-Service Department Costs
$13,300
Number of Service Reports
185
2
20,500
285
3
12,000
120
4
18,500
360
14,900
21,600
5
275
440
16,500
350
21,300
315
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Transcribed Image Text:Lacy Dallas is examining customer-service costs in the southern region of Camilla Products. Camilla Products has more than 200 separate electrical products that are sold with a 6-month guarantee of full repair or replacement with a new product. When a product is returned by a customer, a service report is prepared. This service report includes details of the problem and the time and cost of resolving the problem. Weekly data for the most recent 8-week period are as follows: Week Customer-Service Department Costs $13,300 Number of Service Reports 185 2 20,500 285 3 12,000 120 4 18,500 360 14,900 21,600 5 275 440 16,500 350 21,300 315
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