The table below shows monthly data collected on production costs and on the number of units

produced over a twelve month period.

Month

July

August

September

October

November

December

Discussion Question

January

February

March

April

May

June

Total Production

Costs

$230,000

250,000

260,000

220,000

340,000

330,000

200,000

210,000

240,000

380,000

350,000

290,000

Level of Activity

(Units Produced)

3,500

3,750

3,800

3,400

5,800

5,500

2,900

3,300

3,600

5,900

5,600

5,000/na) 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 y-

axis.

e) 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.)

f) Which of the two methods appear more appropriate? Explain your answer.