Discussion Question The table below shows monthly data collected on production costs and on the number of units produced over a twelve-month period. MonthTotal Production CostLevel of Activity (Units Produced)July$230,0003,500August250,0003,750September260,0003,800October220,0003,400November340,0005,800December330,0005,500January 200,0002,900February210,0003,300March240,0003,600April380,0005,900May350,0005,600June290,0005,000a) 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.

The question is based on the concept of cost accounting. As per the Bartlerby guidelines we are…

Answered: Discussion Question The table below…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...

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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 Cost	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

a) 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.

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