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:

1. 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 for f and v.
2. 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 for f and v.
3. 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?
4. Assume Laser It charges $4,000 for each surgery performed. Use the high-low cost information (for 70 surgeries) to prepare a contribution margin income statement. (Hint: You will only have one line item for variable costs and one line item for fixed costs.)