Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 27

Cost Estimation; High-Low Method; MAPE Ethan Manufacturing Inc. produces floor mats for automobiles. The owner, Joseph Ethan, has asked you to assist in estimating maintenance costs. Together, you and Joseph determine that the single best cost driver for maintenance costs is machine hours. These data are from the previous fiscal year for maintenance expense and machine hours:

Required
1. What is the cost equation for maintenance cost using the high-low method
2. Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1.