Managerial ACCT 2 Ulrich Framing is well known for the quality of its picture framing. Lucinda Ulrich, CEO, believes that the number of linear feet or framing used is the best is the best predictor of framing costs for her company. Her assistant accumulate the following data: [please note abbreviation meaning] LFF = Linear Feet of Framing; M= number of Mats; FC= Framing Costs January 20,000 (LFF) ; 7,100 (M); $17,0000 (FC); February 25,000 (LFF), 8,120 (M), 19,500 (FC); March 27,000 LFF, 8,500 (M), 21,000(FC); April 22,000(LFF), 8,400 (M), 18,000(FC); May 24,000 LFF, 8,300(M), 19,000(FC), June 30,000 LFF, 10,600(M) and 24,000(FC).
Required
A. Use the high/low method to develop a total cost formula for Ulrich Framing. You will need to perform two separate calculations, one for number of feet framing and one for number of mats;
B. Compare the cost formulas developed in question A. Why are there differences?; C. On what basis should Ulrich select a formula to predict framing costs? Would you recommend that Ulrich rely on the results of the high/low method?