The table below shows monthly data collected on production costs and on the number of units produced over a twelve month period. Total Production Costs $230,000 Level of Activity (Units Produced) 3500 Month July August September October 250,000 3.750 260,000 220,000 3400 November 340,000 S800 December 330,000 5500 January February 200,000 2,900 3.300 3.600 5.900 210,000 March 240,000 April May June 350,000 350,000 5600 290,000 5000 a) Determine the variable cost per unit and the fixed cost using the high-low method. b) What is the equation of the total mixed cost function? e) Prepare the scatter diagram, clearly showing any outliers. O Using the line of best-fit, determine the company's fixed cost per month and the variable cost per unit. (eo50o0 lts) e) In view of the department's cost behaviour patterm, which of the two methods appear more appropriate? Explain your answer.
The table below shows monthly data collected on production costs and on the number of units produced over a twelve month period. Total Production Costs $230,000 Level of Activity (Units Produced) 3500 Month July August September October 250,000 3.750 260,000 220,000 3400 November 340,000 S800 December 330,000 5500 January February 200,000 2,900 3.300 3.600 5.900 210,000 March 240,000 April May June 350,000 350,000 5600 290,000 5000 a) Determine the variable cost per unit and the fixed cost using the high-low method. b) What is the equation of the total mixed cost function? e) Prepare the scatter diagram, clearly showing any outliers. O Using the line of best-fit, determine the company's fixed cost per month and the variable cost per unit. (eo50o0 lts) e) In view of the department's cost behaviour patterm, which of the two methods appear more appropriate? Explain your answer.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...
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