Graphing Mixed Cost During a recent six-month period, Wade Corporation had the following

monthly production volume and total monthly maintenance expense:

Units Produced Maintenance Expense

March ...................................................21,000 140,000

April ....................................................15,000 112,000

May.....................................................30,000 184,000

June ....................................................27,000 172,000

July .....................................................35,000 208,000

August ..................................................25,000 160,000

Required

Assume that all volumes are in the relevant range.

a . Explain why the data indicate that the maintenance expense is neither a fixed nor a variable expense.

b . Construct a scattergraph and plot the maintenance expense data.

c . Fit a line (by sight) to the cost observation points and estimate the cost formula.

d. Confirm your answer in requirement (c) with high-low analysis.