Oki Products Ltd has observed the following processing costs at various levels of activity over the last 15 months:

Required
1. Prepare a scattergraph by plotting the above data on a graph. Plot cost on the vertical axis and activity on the horizontal axis. Fit a line to your plotted points by visual inspection.

2. Using your scattergraph, what is the approximate monthly fixed cost? The approximate variable cost per unit processed? What is the cost formula? Show your computations.

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Month 1 2 3 4 LO 5 6 7 00 8 9 10 11 12 13 14 15 Units produced 4,500 11,000 12,000 5,500 9,000 10,500 7,500 5,000 11,500 6,000 8,500 10,000 6,500 9,500 8,000 Processing cost £38,000 52,000 56,000 40,000 47,000 52,000 44,000 41,000 52,000 43,000 48,000 50,000 44,000 48,000 46,000