Laser It, Inc., provides Laser Liposuction surgery for its patients.

You are the accountant for Laser It, and management has asked you to devise a way of accurately estimating company costs for planning and decision-making purposes. You believe that reviewing historical data for costs and number of surgeries is the best starting point. These data are as follows:

Reporting Period (Month)Total Costs / Number of Surgeries

January $209,000 /54

February 206,000 /52

March 217,000 /55

April 200,000 /50

May 233,000 /62

June 229,000 /60

July 225,000 /57

August 234,000 /63

September 252,000 /71

October 251,000 /70

November 246,000 /66

December 245,000 /65

Required:

-Use the four steps of the high-low method to estimate total fixed costs per month, and the variable cost per surgery. State your results in the cost equation form Y =f+vX by filling in the dollar amounts forfandv.

-Use the five steps of the scattergraph method to estimate total fixed costs per month, and the variable cost per surgery. State your results in the cost equation form Y =f+vX by filling in the dollar amounts forfandv.

-Use the results of the high-low method (a) and scattergraph method (b) to estimate costs for 70 surgeries. (You will have two different answersone for each method.) Which approach do you think is most accurate and why?

-Assume Laser It charges $4,000 for each surgery performed. Use the high-low cost information (for 70 surgeries) to make a contribution margin income statement. (Hint: You will only have one line item for variable costs and one line item for fixed costs.)