d) Using the line of best-fit, determine the company’s fixed cost per month and thevariable 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 ofunits produced over a twelve month period.MonthTotal ProductionCostsLevel of Activity(Units Produced)July$230,0003,500August250,0003,750September260,0003,800October220,0003,400November340,0005,800December330,0005,500January200,0002,900February210,0003,300March240,0003,600| April380,0005,900Мay350,0005,600June290,0005,000

Fixed costs are those costs which do not vary with increase in production. As production increases…

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

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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

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