the table below shows monthly data collected on production costs and o

Question

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.