Cost Classification Discussion QuestionThe table below shows monthly data collected on production costs and on the number of units produced over a twelve month period. MonthTotal Production CostsLevel of Activity (Units Produced)July$230,0003,500August250,0003,750September260,0003,800October220,0003,400November340,0005,800December330,0005,500January200,0002,900February210,0003,300March240,0003,600April380,0005,900May350,0005,600June290,0005,000Prepare the scatter diagram and insert the trendline or line of best-fit. Use a scale of 2 cm to represent 1,000 units on the x-axis & 2 cm to represent $50,000 on the yaxis.Using the line of best-fit, determine the company’s fixed cost per month and the variable cost per unit. (Use 0 & 5,000 units.) I'd like to see a breakdown please. Which of the two methods appear more appropriate? Explain your answer.

Add the given data in excel as follows.

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6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Cost Classification Discussion Question

The table below shows monthly data collected on production costs and on the number of units produced over a twelve month period.

Month	Total Production Costs	Level of Activity (Units Produced)
July	$230,000	3,500
August	250,000	3,750
September	260,000	3,800
October	220,000	3,400
November	340,000	5,800
December	330,000	5,500
January	200,000	2,900
February	210,000	3,300
March	240,000	3,600
April	380,000	5,900
May	350,000	5,600
June	290,000	5,000

Prepare the scatter diagram and insert the trendline or line of best-fit. Use a scale of 2 cm to represent 1,000 units on the x-axis & 2 cm to represent $50,000 on the yaxis.
Using the line of best-fit, determine the company’s fixed cost per month and the variable cost per unit. (Use 0 & 5,000 units.) I'd like to see a breakdown please.
Which of the two methods appear more appropriate? Explain your answer.

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