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.) e) Which of the two methods appear more appropriate? Explain your answer

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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d) 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.)
e) 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.
Month
Total Production
Costs
Level of Activity
(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
Мay
350,000
5,600
June
290,000
5,000
Transcribed Image Text: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 Costs Level of Activity (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 Мay 350,000 5,600 June 290,000 5,000
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