Reference no: EM132650534

The table below shows monthly data collected on production costs and on the number of units produced over a twelve month period.

Month                              Total Production                     Costs Level of Activity (Units Produced)

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

May                                    350,000                                             5,600

June                                     290,000                                              5,000

Question a) Determine the variable cost per unit and the fixed cost using the high-low method.

Question b) What is the equation of the total mixed cost function?

Question c) Prepare the scatter diagram, clearly showing any outliers.

Question d) Using the line of best-fit, determine the company's fixed cost per month and the variable cost per unit.

Question e) In view of the department's cost behaviour pattern, which of the two methods appear more appropriate? Explain your answer.