! Required information [The following information applies to the questions displayed below.] The controller of Chittenango Chain Company believes that the identification of the variable and fixed components of the firm's costs will enable the firm to make better planning and control decisions. Among the costs the controller is concerned about is the behavior of indirect-materials cost. She believes there is a correlation between machine hours and the amount of indirect materials used. A member of the controller's staff has suggested that least-squares regression be used to determine the cost behavior of indirect materials. The regression equation shown below was developed from 40 pairs of observations. S = $175 + $4H where S = Total monthly cost of indirect materials H = Machine hours per month 5. Use the high-low method to estimate the behavior of the company's indirect-material cost. Express the cost behavior pattern in equation form. (Round variable cost per machine hour to 2 decimal places.) Machine hours Indirect supplies: Beginning inventory Ending inventory Purchases Indirect material cost = April August 1,600 1,000 $1,900 $1,600 1,650 3,600 6,500 6,800 per machine hour

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

vi.2

!
Required information
[The following information applies to the questions displayed below.]
The controller of Chittenango Chain Company believes that the identification of the variable and fixed components of the
firm's costs will enable the firm to make better planning and control decisions. Among the costs the controller is
concerned about is the behavior of indirect-materials cost. She believes there is a correlation between machine hours and
the amount of indirect materials used.
A member of the controller's staff has suggested that least-squares regression be used to determine the cost behavior of
indirect materials. The regression equation shown below was developed from 40 pairs of observations.
S = $175 + $4H
where S = Total monthly cost of indirect materials
H = Machine hours per month
5. Use the high-low method to estimate the behavior of the company's indirect-material cost. Express the cost behavior pattern in
equation form. (Round variable cost per machine hour to 2 decimal places.)
Machine hours
Indirect supplies:
Beginning inventory
Ending inventory
Purchases
Indirect material cost =
April August
1,600 1,000
$1,900 $1,600
1,650 3,600
6,500
6,800
per machine hour
Transcribed Image Text:! Required information [The following information applies to the questions displayed below.] The controller of Chittenango Chain Company believes that the identification of the variable and fixed components of the firm's costs will enable the firm to make better planning and control decisions. Among the costs the controller is concerned about is the behavior of indirect-materials cost. She believes there is a correlation between machine hours and the amount of indirect materials used. A member of the controller's staff has suggested that least-squares regression be used to determine the cost behavior of indirect materials. The regression equation shown below was developed from 40 pairs of observations. S = $175 + $4H where S = Total monthly cost of indirect materials H = Machine hours per month 5. Use the high-low method to estimate the behavior of the company's indirect-material cost. Express the cost behavior pattern in equation form. (Round variable cost per machine hour to 2 decimal places.) Machine hours Indirect supplies: Beginning inventory Ending inventory Purchases Indirect material cost = April August 1,600 1,000 $1,900 $1,600 1,650 3,600 6,500 6,800 per machine hour
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Cost control
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education