The table below shows monthly data collected on production costs and on the number of units produced over a twelve month period. Level of Activity (Units Produced) Month Total Production Costs 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 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) 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 y- axís. d) Using the line of best-fit, determine the company's fixed cost per month and the variable cost per unit. (useo g 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. Level of Activity (Units Produced) Month Total Production Costs 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 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) 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 y- axís. d) Using the line of best-fit, determine the company's fixed cost per month and the variable cost per unit. (useo g 5,000 units.) e) Which of the two methods appear more appropriate? Explain your answer.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 1 images
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning