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Nike, Inc. provides the following data for its production costs over six months: Month Units Produced Total Costs Jan 5,000 $50,000 Feb 7,000 $65,000 Mar
Nike, Inc. provides the following data for its production costs over six months:
Month | Units Produced | Total Costs |
Jan | 5,000 | $50,000 |
Feb | 7,000 | $65,000 |
Mar | 6,000 | $55,000 |
Apr | 8,000 | $70,000 |
May | 9,000 | $80,000 |
Jun | 10,000 | $90,000 |
Required:
- Use the high-low method to estimate the fixed and variable costs.
- Determine the cost function.
- Discuss the limitations of the high-low method in cost estimation.
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