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The table below shows monthly data collected on production costs and on the number of units produced over a twelve month period. Month July August September October November December Total Production Costs $230,000 250,000 260,000 220,000 340,000 330.000 Level of Activity (Units Produced) 3,500 3,750 3,800 3,400 5,800

The table below shows monthly data collected on production costs and on the number of units produced over a twelve month period. Month July August September October November December Total Production Costs $230,000 250,000 260,000 220,000 340,000 330.000 Level of Activity (Units Produced) 3,500 3,750 3,800 3,400 5,800

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 13CE: Nashler Company has the following budgeted variable costs per unit produced: Budgeted fixed overhead...
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The table below shows monthly data collected on production costs and on the number of units produced over a twelve month period. Month Discussion Question July August September October November December January February March April May June Total Production Costs $230,000 250,000 260,000 220,000 340,000 330,000 200,000 210,000 240,000 380,000 360,000 290,000 Level of Activity (Units Produced) 3,500 3,750 3,800 3,400 5,800 5,500 2,900 3,300 3,600 5,900 5,600 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-lit. Use a scale of 2 cm to represent 1,000 units on the x-axis & 2 cm to represent $50,000 on the y- e) Using the line of best fit delermine the company's lixed 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.
Transcribed Image Text:The table below shows monthly data collected on production costs and on the number of units produced over a twelve month period. Month Discussion Question July August September October November December January February March April May June Total Production Costs $230,000 250,000 260,000 220,000 340,000 330,000 200,000 210,000 240,000 380,000 360,000 290,000 Level of Activity (Units Produced) 3,500 3,750 3,800 3,400 5,800 5,500 2,900 3,300 3,600 5,900 5,600 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-lit. Use a scale of 2 cm to represent 1,000 units on the x-axis & 2 cm to represent $50,000 on the y- e) Using the line of best fit delermine the company's lixed 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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