05 Mar High-Low Method, Cost FormulasThe controller of th
High-Low Method, Cost FormulasThe controller of the South Charleston plant of Ravinia, Inc., monitored activities associated with materials handling costs. The high and low levels of resource usage occurred in September and March for three different resources associated with materials handling. The number of moves is the driver. The total costs of the three resources and the activity output, as measured by moves for the two different levels, are presented as follows: Resource Number of Moves Total Cost Forklife depreciation Low 3,500 $3,500 High 18,500 3,500Indirect Labor: Low 3,500 $50,100 High 18,500 119,100Fuel and oil for Forklife Low 3,500 $2,835 High 18,500 14,985Required:If required, round your answers to two decimal places. Enter a 0 if required.1. Determine the cost behavior formula of each resource. Use the high-low method to assess the fixed and variable components.Forklift depreciation:V$F$Y$Indirect labor:V$F$Y$ + $ XFuel and oil for forklift:V$F$Y$ X2. Using your knowledge of cost behavior, predict the cost of each item for an activity output level of 9,000 moves.Forklift depreciation$Indirect labor$Fuel and oil for forklift$3. Construct a cost formula that can be used to predict the total cost of the three resources combined. If required, round your answers to two decimal places.Materials handling cost = $ _________________ + $ _________________ XUsing this formula, predict the total materials handling cost if activity output is 9,000 moves.Y = $ _________________
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