In view of Stern’s cost behaviour pattern, which of the two methods appear more appropriate? Explain your answer. John Stern operates a retail store. The business is studying order processing costsbehaviour and has gathered the following data for a recent seven-month period.Sales OrderOrder Processing Costs$40,000MonthJune3,000JulyAugustSeptemberOctober$28,000$65,000$39,000$32,000$20,000$30,0001,5004,0002,800NovemberDecember2,3001,0002,000(i)Determine the variable cost per sales order and the fixed cost using the high-lowmethod.(ii)(iii)(iv)What is the equation of the total mixed cost function?Prepare the scatter gram, clearly showing any outliers.Using the "line of best fit", determine Stern's fixed cost per month and thevariable cost per sales orderIn view of Stern's cost behaviour pattern, which of the two methods appearmore appropriate? Explain your answer.(v)

High-low point method is a procedure used to separate a blended expense into its variable and fixed…

John Stern operates a retail store. The business is studying order processing costs behaviour and has gathered the following data for a recent seven-month period. Order Processing Costs $40,000 Month Sales Order June 3,000 | July August September October $28,000 $65,000 $39,000 $32,000 $20,000 $30,000 1,500 4,000 2,800 2,300 November December 1,000 2,000 (i) Determine the variable cost per sales order and the fixed cost using the high-low method. What is the equation of the total mixed cost function? (ii) (iii) Prepare the scatter gram, clearly showing any outliers. (iv) Using the "line of best fit", determine Stern's fixed cost per month and the variable cost per sales order In view of Stern's cost behaviour pattern, which of the two methods appear more appropriate? Explain your answer. (v)

John Stern operates a retail store. The business is studying order processing costs behaviour and has gathered the following data for a recent seven-month period. Order Processing Costs $40,000 Month Sales Order June 3,000 | July August September October $28,000 $65,000 $39,000 $32,000 $20,000 $30,000 1,500 4,000 2,800 2,300 November December 1,000 2,000 (i) Determine the variable cost per sales order and the fixed cost using the high-low method. What is the equation of the total mixed cost function? (ii) (iii) Prepare the scatter gram, clearly showing any outliers. (iv) Using the "line of best fit", determine Stern's fixed cost per month and the variable cost per sales order In view of Stern's cost behaviour pattern, which of the two methods appear more appropriate? Explain your answer. (v)

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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