Martha’s Vineyard Marine Supply is a wholesaler for a large variety of boating and fishing equipment. The company’s controller, Mathew Knight, has recently completed a cost study of the firm’s material-handling department in which he used work measurement to quantify the department’s activity. The control factor unit used in the work-measurement study was hundreds of pounds of equipment unloaded or loaded at the company’s loading dock. Knight compiled the following data.
Units of Activity Month (hundreds of pounds of
equipment loaded or unloaded) Material-Handling
Department Costs
January 1,400 $ 11,350 February 1,200 11,350 March 1,100 11,050 April 2,600 12,120 May 1,800 11,400 June 2,000 12,000 July 2,400 12,550 August 2,200 11,100 September 1,000 10,200 October 1,300 11,250 November 1,600 11,300 December 1,800 11,700 Required:
5. Estimate the material-handling department’s cost behavior using the high-low method. Use an equation to express the results of this estimation method. (Round coefficient of X to 2 decimal places.)