Problem:
Denver Manufacturing would like to do a better job budgeting for maintenance costs and, consequently, they have prepared a schedule showing maintenance costs and units produced for the past five months as follows:
Number of units produced
Total maintenance costs
January -------------
4,400
$4,200
February -----------
6,800
5,400
March --------------
4,900
4,500
April ----------------
5,600
4,900
May -----------------
6,000
5,490
Using the high/low method, what is the cost equation to predict total maintenance costs?
Y = $2,000 + $.50x
Y = $2,400 + $.50x
Y = $4,200 + $.40x
Y = $4,200 + $.50x