The table below shows monthly data collected on production costs and on the number of units produced over a twelve-month period. 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) Prepare the scatter diagram, clearly showing any outliers. d) 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.) e) In view of the department’s cost behavior pattern, which of the two methods appear more appropriate? Explain your answer.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
The table below shows monthly data collected on production costs and on the number of units produced over a twelve-month period.
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) Prepare the scatter diagram, clearly showing any outliers.
d) 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.)
e) In view of the department’s cost behavior pattern, which of the two methods appear more appropriate? Explain your answer.
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