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# The controller of Chittenango Chain Company believes that the identification of the variable and fixed components of the firm's costs will enable the...

Problem 6-44 - Hi, I'm stuck on the first part of this problem about determining the cost of indirect materials. Please see the attached document. I showed how I figured out the August cost, but the formula doesn't work for April's cost. Thanks.
The controller of Chittenango Chain Company believes that the identification of the variable and fixed components of the firm’s costs will enable the firm to make better planning and control decisions. Among the costs the controller is concerned about is the behavior of indirect-materials cost. She believes there is a correlation between machine hours and the amount of indirect materials used. A member of the controller’s staff has suggested that least-squares regression be used to determine the cost behavior of indirect materials. The regression equation shown below was developed from 40 pairs of observations. S = \$200 + \$4 H where S = Total monthly cost of indirect materials H = Machine hours per month 4. The high and low activity levels during the past four years, as measured by machine hours, occurred during April and August, respectively. Data concerning machine hours and indirect-material usage follow. April August Mach ine hours 1,100 800 Indire ct supplie s: Be ginnin g invent ory \$ 1,200 \$ 950 En ding invent ory 1,550 2,900 Pu rchase s 6,000 6,100 Determine the cost of indirect materials used during April and August . April August Cost of indirect material used \$ \$ To figure out August, I did this equation: S = \$950 + 4*800 = \$4,150 CORRECT To figure out April, I did this equation: S = \$1,200 + 4*1,100 = \$5,600 WRONG

The controller of Chittenango Chain Company believes that the identification of the variable and fixed components of the firm's costs will enable the firm to make better planning and control...

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