Sailmaster makes boats and has the following costs and production levels for the last eight quarters:

1. Plot the data on a scattergraph, and visually fit a straight line through the points.
2. Based on your graph, estimate the quarterly fixed cost and the variable cost per unit produced.
3. Use the high-low method to compute the variable and fixed elements of Sailmaster's total costs (round all amounts to the nearest dollar), and then draw a straight line through the high and low data points on the scattergraph.
4. Compute the total cost of making 500 boats using first the scattergraph results and then using the high-low method results.
5. Comment on the differences between these two methods. Which method appears to most accurately represent the actual variable and fixed costs forSailmaster?

Transcribed Image Text:

Boats Produced Quarter Total Costs 108 $101,300 168,750 189,000 200,145 276,200 255,250 305,700 376,500 128 185 245 311 352 389 428 234L