PROBLEM A.

The cost of a lubricant used for automated machining operations tends to vary with the speed of machine operations, and the machine is converted into units of product manufactured each hour. Management hopes to be able to establish the fixed portion and the variable portion of the cost. A record of the costs for various units of product manufactured by Kardo Company is given below, for the last ten (10) months of 2017: Machine Hours Used Costs March 600 5,800.00 April 500 5,900.00 May 400 5,500.00 June 850 6,600.00 July 550 5,900.00 August 650 5,900.00 September 450 5,400.00 October 300 5,000.00 November 600 5,900.00 December 400 5,500.00 REQUIRED: 1. Split the semi-variable cost (lubricating oil) into its fixed and variable components using the following techniques. (Carry computations up to five(5) decimal places for the variable component, and to the nearest peso for the fixed component). a. High-low b. Scattergraph c. Method of least squares (compute also the coefficient of correlation and the coefficient of determination)