Question
A business is studying its order processing costs behaviour and has gathered the following data for a recent seven months period. Month Sales Order
A business is studying its order processing costs behaviour and has gathered the following data for a recent seven months period. Month Sales Order Order Processing Costs January 6.000 10,000 February 3.000 7,000 March 8 000 16,250 April 7 200 9,750 May 4 600 8,000 June 2.000 5,000 July 4 000 7,500 i. Determine the variable cost per sales order and the fixed cost using the high low method. ii. (8 marks) State the equation of the total mixed cost function. (2 marks) b. The following cost and activity data were taken from the factory records: Cost Activity $ (units) 28 16 31 20 40 28 36 28 44 36 47 40 Using the least squares method of linear regression, calculate the fixed and variable elements of the cost and state the linear cost function. (15 marks)
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