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 Level of Activity Costs (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 I would like question d,e,f answered please. 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? c) Based on the High-Low method, what is the total production costs if 6,500 units are produced? d) 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. e) 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.) f) Which of the two methods appear more appropriate? Explain your answer
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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 Level of Activity
Costs (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
I would like question d,e,f answered please.
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?
c) Based on the High-Low method, what is the total production costs if 6,500 units are
produced?
d) 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.
e) 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.)
f) Which of the two methods appear more appropriate? Explain your answer
Introduction
The high-low approach is used to determine the variable and fixed costs of a mixed-cost product or business. It takes into account two things. It takes into account both the total dollar amount of mixed costs at the level of activity with the largest volume and the total dollar amount of mixed costs at the level of activity with the lowest volume.
Costs that are fixed are those that don't change based on volume. The majority of fixed costs are expenses that depend more on time than they do on how much your company produces or sells.
Variable costs are expenses that vary in relation to manufacturing output or sales. Variable costs rise in response to rising production or sales, and fall in response to falling output or sales.
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