Betty and Mark met with the supervisor of the pizza division of a medium-sized Italian food supplier. The supervisor explained the two key costs in his division, as follows. Cost Type Each pizza MOH Number of Units 3,200 Betty's cost model Mark's cost model 3,200 Total $13,440 $3,840 Although Betty and Mark used this data to estimate a model for the division's costs, they each came up with a different model, as follows. Total pizza division cost = $4.20 (number of pizzas) + $3,840 Total pizza division cost = $5.40 (number of pizzas)
Betty and Mark met with the supervisor of the pizza division of a medium-sized Italian food supplier. The supervisor explained the two key costs in his division, as follows. Cost Type Each pizza MOH Number of Units 3,200 Betty's cost model Mark's cost model 3,200 Total $13,440 $3,840 Although Betty and Mark used this data to estimate a model for the division's costs, they each came up with a different model, as follows. Total pizza division cost = $4.20 (number of pizzas) + $3,840 Total pizza division cost = $5.40 (number of pizzas)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
1) What understanding did Betty have about cost of behavior of these costs?
MOH Cost: a) fixed b)Variable c)Mixed
Pizza Cost: a) fixed b)Variable c)Mixed
2)What understanding did Mark have about cost of behavior of these costs?
MOH Cost: a) fixed b)Variable c)Mixed
Pizza Cost: a) fixed b)Variable c)Mixed
3)Recognizing that these were the only two pieces of data they had, which method of cost estimation did they likely use?
Betty: a)Accounting Analysis Method b)High Low-Method c)Regression Method
Mark: a)Accounting Analysis Method b)High Low-Method c)Regression Method
Transcribed Image Text:Betty and Mark met with the supervisor of the pizza division of a medium-sized Italian food supplier. The supervisor explained the two
key costs in his division, as follows.
Cost Type
Each pizza
MOH
Number of Units
3,200
Betty's cost model
Mark's cost model
3,200
Total
$13,440
$3,840
Although Betty and Mark used this data to estimate a model for the division's costs, they each came up with a different model, as
follows.
Total pizza division cost = $4.20 (number of pizzas) + $3,840
Total pizza division cost = $5.40 (number of pizzas)
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