Chapter 5, Problem 2PSB

To determine

Concept introduction:

Scatter diagram is used to depict a relationship between two variables making it easier to spot trends and correlation and shows the following conclusion.

With increase in Y-axis variable with rise in X-axis variable, correlation will be positive.

With decrease in Y-axis variable with rise in X-axis variable, correlation will be negative.

If correlation is equal to zero, then, it will not be possible from the above criteria.

Requirement 1:

Scattered diagram for the data with sales volume on horizontal axis and the total cost on vertical axis.

To determine

Concept introduction:

Scatter diagram is used to depict relationship between two variables making it easier to spot trends and correlations and show the following conclusion.

With increase in Y-axis variable with rise in X-axis variable, correlation will be positive.

With decrease in Y-axis variable with rise in X-axis variable, correlation will be negative.

If correlation is equal to zero, then, it will not be possible from above criteria.

Variable cost changes with changes in level of production and the fixed cost remains constant.

To explain:

The variable cost per sales dollar and the total monthly fixed cost using high −low method and a linear graph.

To determine

Concept introduction:

Scatter diagram is used to depict relationship between two variables making it easier to spot trends and correlation and it shows the following conclusion.

With increase in Y-axis variable with rise in X-axis variable, correlation will be positive.

With decrease in Y-axis variable with rise in X-axis variable, correlation will be negative.

If correlation is equal to zero, then, it will not be possible from the above criteria.

The estimated line of cost behaviour result from part 2 and the prediction of the total cost when sale is $100 and $170.