Sun Co.’s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs.

Required

1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method.

2. Use the answers for variable and fixed costs from part 1 to predict future total costs when sales volume is 

(a) 100,000 units 

(b) 170,000 units.

Analysis Component

3. Use these data to prepare a scatter diagram. Draw an estimated line of cost behavior and determine whether the cost appears to be variable, fixed, or mixed.

Transcribed Image Text:

8... Total Cost Month Units Sold Total Cost Month Units Sold 195,000 $ 97,000 1... 145,000 $ 93,000 1.... 125,000 87,000 185,000 105,000 2.... 105,000 73,000 9.. 135,000 85,000 3.... 155,000 89,000 10... 85,000 58,000 4.... 95,000 81,000 11... 175,000 95,000 5.... 215,000 110,000 12 ... 115,000 79,000 6....