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Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Total Cost $ 97,000 87,000 73,000 89,000 81,000 110,000 Units Sold 195,000 2.... 125,000 3.... 105,000 155,000 95,000 215,000 Month 5.... 6.... Month 7... 8... Units Sold 145,000 185,000 135,000 10... 85,000 175,000 115,000 11... 12... 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.

Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Total Cost $ 97,000 87,000 73,000 89,000 81,000 110,000 Units Sold 195,000 2.... 125,000 3.... 105,000 155,000 95,000 215,000 Month 5.... 6.... Month 7... 8... Units Sold 145,000 185,000 135,000 10... 85,000 175,000 115,000 11... 12... 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 195,000 125,000 105,000 4.... 155,000 5.... 95,000 6.... 215,000 Month 1.... 2.... 3.... Total Cost $ 97,000 87,000 73,000 89,000 81,000 110,000 Month 7 ... 8... 9... 10... 11 85,000 175,000 12... 115,000 Units Sold 145,000 185,000 135,000 *** 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 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. page 799
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 195,000 125,000 105,000 4.... 155,000 5.... 95,000 6.... 215,000 Month 1.... 2.... 3.... Total Cost $ 97,000 87,000 73,000 89,000 81,000 110,000 Month 7 ... 8... 9... 10... 11 85,000 175,000 12... 115,000 Units Sold 145,000 185,000 135,000 *** 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 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. page 799
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