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Question - Martinez and Company is trying to determine the cost behaviour of their packaging costs. The following data are available for the past six months:
Month
Number of packages
Costs Incurred
January
5,000
$4,200
February
3,800
$3,800
March
4,200
$3,855
April
4,800
$4,050
May
5,720
$5,078
June
3,740
$3,791
Required - Use the high-low method to:
a. Determine the variable cost per package.
b. Determine the fixed component of packaging costs.
c. Determine the cost formula for packaging costs.
d. Using the formula from part c what would the total packaging costs be if the company had 4,900 packages?
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