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ACTG 2P21 S01 June 7

# ACTG 2P21 S01 June 7 - high low method to estimate Paul...

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ACTG 2P21 S01 7 June 2010 IKM say I was required to make improvements. It does not involve being encouraged to improve. Will definitely be on final. Textbook question 7.56 For the final we should be able to do last days problem in 5 minutes. We will almost always have a variable and fixed POR from now on. How do we estimate fixed and variable OH. The best way is a line by line approach and go out to the market and see how much it should cost and build spoilage in. This is time consuming and you might not have the manpower to do it. The second best method is using an internal forecast based on last years data. Plot our volume of DL hours on the x axis and OH spending in dollars on the y axis. Then estimate what your volume should be and draw a line to represent that. Use the

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Unformatted text preview: high low method to estimate. Paul doesn’t like using regression analysis because the data is usually off and using accurate math does not correct bad data. SP \$/DLH SQ DLH/box SC \$/ box DM1 DM2 DL 0.25 VOH 0.3 \$/DLH 0.25 FOH 0.25 2.92 11.68 .25 The high volume for this problem is 12000 DLH/year. The low is 7000 DLH/year The high cost is 62000 \$/year and the low cost is \$60500 \$/year 62000 \$per year – 60500 \$per year = 0.3 \$/DLH 12000 DLH per year – 7000 DLH per year Realization rate= 480-96 = 0.8 480 Standard quantity DL = 0.2DLHper box (12-60) 0.8 =0.25 DLH/box...
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ACTG 2P21 S01 June 7 - high low method to estimate Paul...

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