Reference no: EM131727812

QUESTION -

PART A - Wollongong Pathology is a medical testing laboratory situated in Wollongong. Dr. Curin Strong the CEO of the centre is in the process of making estimation on the cost of X-rays of the centre. The number of X-rays taken and X-ray costs over the last nine months in Wollongong Pathology are given below:

Month	X-Rays Taken	X-Ray Costs($)
January	6,250	$28,000
February	7,000	$29,000
March	5,000	$23,000
April	4,250	$20,000
May	4,500	$22,000
June	3,000	$17,000
July	3,750	$18,000
August	5,500	$24,000
September	3,250	$16,000

Required:

(a) Using High-Low method, estimate the cost formula for X-ray costs.

(b) Estimate the cost of X-rays for October using both regression and high-low methods, assuming a least-square regression analysis estimated the total fixed costs to be $5,920 per month and the variable cost to be $3.38. The number of x-rays for October is expected to be 4,000. Comment on the accuracy of your high-low estimates.

Part B - SuperCools Company is the exclusive distributer for evolutionary two types of cooling bag Deluxe and Superior. The budget income statement for next period is as follows:

	Deluxe	Superior	Total
Sales Mix Units sold	187 500	62 500	250 000
Revenues	$5 250 000	$3 125 000	$8 375 000
Variable	$3 375 000	$1 875 000	$5 250 000
Contribution margins	$1 875 000	$1 250 000	$3 125 000
Fixed Cost			$2 250 000
Profit			$ 875 000

Required: Calculate the estimated break-even point in units and dollars that the planned sales mix is attained.