Ethan Manufacturing Inc. produces floor mats for automobiles. The owner, Joseph Ethan, has asked you...
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Accounting
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 costs and machine hours:
Month
Maintenance Costs
Machine Hours
1
$
2,690
1,780
2
2,850
1,860
3
3,000
1,940
4
3,110
1,960
5
3,190
1,990
6
3,160
1,970
7
3,100
1,950
8
2,940
1,930
9
2,710
1,790
10
2,310
1,190
11
2,320
1,390
12
2,540
1,680
Required:
1. What is the cost equation for maintenance costs using the high-low method?
2. Calculate the mean absolute percentage error (MAPE) for the cost equation you developed in requirement 1.
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