PROBLEM SET B Problem 21-1B Cost estimation using high-low method P1 Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Month Units Sold 1.... 195,000 2.... 125,000 3.... 105,000 4.... 155,000 5.... 95,000 6.... 215,000 110,000 Total Cost $ 97,000 87,000 73,000 89,000 81,000 Month Units Sold 7... 145,000 8... 185,000 9... 10 10 ... 11 135,000 85,000 175,000 12 ... 115,000 Total Cost $ 93,000 105,000 85,000 58,000 95,000 79,000 Required 1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. 2. Use the answers for variable and fixed costs from part 1 to predict future total costs when sales volume is (a) 100,000 units and (b) 170,000 units.
PROBLEM SET B Problem 21-1B Cost estimation using high-low method P1 Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Month Units Sold 1.... 195,000 2.... 125,000 3.... 105,000 4.... 155,000 5.... 95,000 6.... 215,000 110,000 Total Cost $ 97,000 87,000 73,000 89,000 81,000 Month Units Sold 7... 145,000 8... 185,000 9... 10 10 ... 11 135,000 85,000 175,000 12 ... 115,000 Total Cost $ 93,000 105,000 85,000 58,000 95,000 79,000 Required 1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. 2. Use the answers for variable and fixed costs from part 1 to predict future total costs when sales volume is (a) 100,000 units and (b) 170,000 units.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:PROBLEM SET B
Problem 21-1B
Cost estimation using high-low method P1
Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs.
Units Sold
1....
2....
195.000
125,000
3....
105,000
4.... 155,000
5.... 95,000
6.... 215,000
Month
Total Cost
$ 97,000
87,000
73,000
89,000
81,000
110,000
Month
7 ...
8...
9...
10 ...
11 ...
12 ...
Units Sold
145,000
185,000
135,000
85,000
175,000
115,000
Total Cost
$ 93,000
105,000
85,000
58,000
95,000
79,000
Required
1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method.
2. Use the answers for variable and fixed costs from part 1 to predict future total costs when sales volume is (a) 100,000 units and (b) 170,000 units.
Analysis Component
page 799
3. Use these data to prepare a scatter diagram. Draw an estimated line of cost behavior and determine whether the cost appears to be variable, fixed, or mixed.
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