Cost Classification Discussion Question 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 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 yaxis. 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.) I'd like to see a breakdown please. Which of the two methods appear more appropriate? Explain your answer.
Cost Classification Discussion Question 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 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 yaxis. 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.) I'd like to see a breakdown please. Which of the two methods appear more appropriate? Explain your answer.
Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
Related questions
Question
Cost Classification Discussion Question
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 |
- 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 yaxis.
- 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.) I'd like to see a breakdown please.
- Which of the two methods appear more appropriate? Explain your answer.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 3 images