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Month Total Production Cost Level of Activity (units prodcued) ...

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Accounting

Month Total Production Cost

Level of Activity

(units prodcued)
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
Januaury 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

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 companys 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.

f) which one of the two methods appear more appropriate? explain your answer.

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