Question

Gibson Boat Company makes inexpensive aluminum fishing boats. Production is seasonal, with considerable activity occurring in the spring and summer. Sales and production tend to decline in the fall and winter months. During 2019, the high point in activity occurred in June when it produced 206 boats at a total cost of $156,260. The low point in production occurred in January when it produced 33 boats at a total cost of $49,000.

Required

Use the high-low method to estimate the amount of fixed cost incurred each month by Gibson Boat Company.

Determine the total estimated cost if 160 boats are made.

Answer 1