Question
AL Mustapha Company produces different products through automation. The company incurs largeamount of overheads in the factory on power alone , that is semi-variable in
AL Mustapha Company produces different products through automation. The
company incurs largeamount of overheads in the factory on power alone ,
that is semi-variable in nature.
The details of power costs for 6 months ending September,2020 are provided
below.
Months 2020. Machine Hours - Power Cost (OMR)
April 50,000 400,000
May 60,000 460,000
June 40,000 340,000
July 45,000 370,000
August 70,000 520,000
September 75,000 550,000
You are required to use both High and low method and linear regression analysis to separate
the fixedand variable costs .
High and low methods should be calculated by taken the following parameters into
consideration.
1. Calculate the Variable cost per unit .
2. Calculate the Fixed cost
3. Construct the cost function
Linear regression analysis should be calculated by the application of the linear regression
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