Cost-Estimation

Lorenzo operates a brushless car wash. Incoming cars are put on an automatic, continuously moving conveyor belt. A car is washed as the conveyor belt carries it from the start station to the finish station. After the car moves off the conveyor belt, workers dry it and clean and vacuum the inside. Workers are managed by a single supervisor.
Lorenzo’s accountant wants to estimate total costs in December, when 10,450 cars are expected to be washed. She uses two different methods to estimate total December costs, account analysis and high-low, with number of cars washed as the independent variable for both methods.
For the account analysis method, she developed cost function parameter estimates by analyzing actual costs in February, when 9,200 cars were washed. The following are February total costs and her fixed cost estimates:

$3,680

$0

$3,900

	Cost Item	Total Cost	Fixed Portion
	Soap, cloths, and supplies Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper		$3,680		$0
	Water
	Car wash labor	$24,640	$2,560
	Power for conveyor	$12,990	$2,870
	Supervisor and cashier		$3,900

For the high-low method, she developed cost function parameter estimates by using the actual costs in April and May, when 8,900 and 12,000 cars were washed, respectively. The following are total costs for these two months:

  Cost Item

  Soap, cloths, and supplies

  Water

$1,780

$2,400

  Car wash labor

  Power for conveyor

  Supervisor and cashier

$3,650

April	May
	$1,780		$2,400
$24,350	$32,100
$11,100	$14,200
	$3,650

REQUIRED [ROUND PER-UNIT COSTS TO TWO DECIMAL PLACES AND TOTAL COSTS TO THE NEAREST DOLLAR.]
Part A ()
1. Using account analysis, what is the accountant’s estimate of total fixed costs for December?  
2. Using account analysis, what is the accountant’s estimate of variable costs per unit for December?

Part B ()
1. Using the high-low method, what is the accountant’s estimate of total fixed costs for December?  
2. Using the high-low method, what is the accountant’s estimate of total variable costs for December?