Unifying Concepts: High-Low and Scattergraph Methods You have been hired as a consultant for Jones Inc. The company manufactures high-density compact disks and sells them to a wide variety of business clients. Management is eager to learn more about the company’s cost behavior. You have been provided the following data.

Assume all production falls within the relevant range.

Required:
1. Using the high-low method, compute the variable and fixed elements of Jones’ utility costs.
2. Plot the information on a scattergraph. Based on your graph, determine the unit variable cost and monthly fixed costs.
3. Interpretive Question: Why are the variable cost per unit and fixed costs different for each of these methods of analysis? Which method is the most accurate for determining variable and fixed cost components?

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Month Machine Hours Utility Costs January February 290 $10,700 280 10,400 March 320 11,600 April 340 12,100 May 350 12,400 June 290 10,750 July 300 10,800 August 300 10,900 September 310 11,200 October 340 12,200 November 290 10,600 December 310 11,000