Ethan Manufacturing Incorporated produces floor mats for automobiles. The owner, Joseph Ethan, has asked you...
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Accounting
Ethan Manufacturing Incorporated 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 | $ 2,600 | 1,690 |
| 2 | 2,760 | 1,770 |
| 3 | 2,910 | 1,850 |
| 4 | 3,020 | 1,870 |
| 5 | 3,100 | 1,900 |
| 6 | 3,070 | 1,880 |
| 7 | 3,010 | 1,860 |
| 8 | 2,850 | 1,840 |
| 9 | 2,620 | 1,700 |
| 10 | 2,220 | 1,100 |
| 11 | 2,230 | 1,300 |
| 12 | 2,450 | 1,590 |
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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