Exercise 21-1 Measurement of cost behavior using a scatter diagram LO P1

A company reports the following information about its sales and its cost of sales. Each unit of its product sells for $500.

Period	Sales				Cost of Sales
1		$	22,500			$	15,150
2			17,250				11,250
3			15,750				10,500
4			11,250				8,250
5			13,500				9,000
6			18,750				14,250

(Use these data to prepare a scatter diagram offline. Draw an estimated line of cost behavior (offline).)

Determine whether the cost appears to be variable, fixed, or mixed.

Mixed cost

Fixed cost

Variable cost