Make sure any calculations are clearly shown.
a) Complete the chart, showing manufacturing cost at variouslevels of production for Company X
Volume (units) | | 10,000 | 20,000 | 30,000 | 40,000 |
Cost A | | $25,000 | $25,000 | | $25,000 |
Cost B | | $25,000 | $50,000 | | $100,000 |
Cost C | | $33,000 | $48,000 | | $78,000 |
| | | | | |
Unit cost | | $8.30 | | | |
b) What pattern do you observe in the behavior of unit cost?Explain briefly why this occurs.
c) Develop an equation in the form of Y = a +bX to forecasttotal manufacturing cost. Use this equation to forecast total costsat a level of 70,000 units.
d) Identify one reason why your forecast in c) may beunreliable.
