The Controller of Fortnight Co Using the High-Low Method to Develop a Cost Estimating Equation

The controller of Fortnight Co. has requested a quick estimate of the manufacturing supplies needed for the Cleveland 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. Fortnight Co.'s budget analyst has the following actual data for the last three months.
$\begin{array}{llr}&\text { Production in }\\\text {Month}&\text {Units}&\text { Manufacturing Supplies}\\\text { March } & 450,000 & \$ 723,060\\\text { April } & 540,000 & 853,560\\\text { May } & 480,000 & 766,560\end{array}$

Using the high-low method to develop a cost estimating equation, the total estimated cost of needed manufacturing supplies for July would be: (CMA adapted)

A) $681,500.
B) $688,750.
C) $749,180.
D) $752,060.

Correct Answer:

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