Income Statement for Most Recent Year of Operation

Revenues	$2,837,200
Cost of goods sold (COGS)	1,874,000
Gross margin	963,200
Selling, general, and administrative expenses (SG&A)	545,000
Profit before tax	$ 418,200

Source: All exhibits created by author.

Exhibit 2

JW Sports Supplies (A)

Production/Sales Levels and Costs by Month

	Actual units	Actual cost
Jan	2,000	$125,000
Feb	2,100	$131,000
Mar	2,175	$130,000
Apr	2,250	$145,000
May	2,410	$153,000
Jun	2,520	$157,000
Jul	2,600	$160,000
Aug	2,710	$165,000
Sep	2,800	$173,000
Oct	2,970	$175,000
Nov	1,970	$175,000
Dec	2,970	$145,000
Jan	2,510	$165,000
Feb	2,650	$155,000
Mar	2,450	$140,000
Apr	2,200	$137,000
May	2,210	$155,000
Jun	2,900	$179,000
Jul	2,890	$187,000
Aug	2,200	$137,000
Sep	2,210	$155,000
Oct	2,600	$168,000
Nov	2,700	$173,000
Dec	2,850	$168,000

a. Create a scatterplot of costs and units.

b. From your scatterplot, estimate the variable cost (VC) per unit and the total monthly fixed costs (FCs).

c. Are there any outliers in the data? If so, which observations?

d. What is the relevant range of activity represented by the data?