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month total distribution cost level of activity (unit produced) july 230.000 3500 august 250.000 3750 september 260.000 3800 october 220.000 3400 november 340.000 5800 december
month | total distribution cost | level of activity (unit produced) |
july | 230.000 | 3500 |
august | 250.000 | 3750 |
september | 260.000 | 3800 |
october | 220.000 | 3400 |
november | 340.000 | 5800 |
december | 330.000 | 5500 |
January | 200.000 | 2900 |
February | 210.000 | 3300 |
March | 240.000 | 3600 |
April | 380.000 | 5900 |
may | 350.000 | 5600 |
june | 290.000 | 5000 |
a) Determine the variable cost per unit and the fixed cost using the high-low method.
b) What is the equation of the total mixed cost function?
c) Prepare the scatter diagram, clearly showing any outliers.
d) Using the line of best-fit, determine the companys fixed cost per month and the variable cost per unit. (Use 0 & 5,000 units.)
e) In view of the departments cost behaviour pattern, which of the two methods appear more appropriate? Explain your answer.
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