Appendix 3A) Separating Fixed and Variable Costs, Service Setting Louise McDermott, controller for the Galvin plant or Veromar Inc., wanted to determine the cost behavior of moving materials throughout the plant. She accumulated the following data on the number of moves (from 100 to 800 in increments of 100) and the total cost of moving materials at those levels of moves: Number of Moves Total Cost 100 $3,000 200 4.650 300 3,400 400 8,500 500 10,000 600 12,600 13.600 700 800 14,560 Required: 1. Prepare a scattergraph based on the data above. Use cost for the vertical axis and number of moves for the horizontal. Based on an examination of the scattergraph, does there appear to be a linear relationship between the total cost of moving materials and the number of moves? Yes b. Compute the cost formula for moving materials by using the high-low method. Calculate the predicted cost for a month with 550 moves by using the high-low formula. (Note: Round the answer for the variable rate to three decimal places and the answer for total fixed cost and total cost to the nearest dollar.) Variable rate $ 16.514 per move 1,349 Fixed cost Total cost $ 10,432 3. Conceptual Connection: Compute the cost formula for moving materials using the method of least squares. (Note: For the method of least squares, round the variable rate to two decimal places and total fixed cost and total cost to the nearest dollar.) using the regression cost formula, what is the predicted cost for a month with 550 moves? variable rate $ 18,425 x per move 497 x Fixed cost Total cost $ 10,631 x