(a) The total costs incurred at various output levels, for a process operation in a factory, have been measured as follows:
Output (units) Total cost (£)
11 500 ............ 102 476
12 000 ............ 104 73
12 500............ 106 263
13 000............ 108 021
13 500............ 110 727
14 000............ 113 201
Required:
Using the high-low method, analyze the costs of the process operation into fixed and variable components.
(b) Calculate, and comment upon, the break-even output level of the process operation in (b) above, based upon the fixed and variable costs identified and assuming a selling price of £10.60 per unit.