Q.1. Case Exhibit 2 presents monthly data of units produced and sold, and actual costs incurred, for 24 months.

a.Create scatter plot of costs and units.

b.From your scatter plot, estimate the variable cost (VC) per unit and the total monthly fixed costs (FCs).

c.Are there any outliers in the data? If so, which observations?

d.What is the relevant range of activity represented by the data?

Page 2 UVA-C-2402 Exhibit 1 JW Sports Supplies (A) Income Statement for Most Recent Year of Operation Revenues $1,837,200 Cost of goods sold (COGS) 1,274,000 Gross margin 563,200 Selling, general, and administrative expenses (SG&A) 345,000 Profit before tax $ 218,200 Source: All exhibits created by author. Exhibit 2 JW Sports Supplies (A) Production /Sales Levels and Costs by Month Actual units Actual cost Jan 1,000 $ 100,000 Feb 1,100 $ 106,000 permissions@dardenbusinesspublishing.com for permissions Mar 1,175 $ 105,000 Please do not copy or redistribute. Additional materials may be available at store.darden. virginia.edu. Contact Apr 1,250 $ 120,000 May 1,410 $ 128,000 Jun 1,520 $ 132,000 Jul 1,600 $ 135,000 Aug 1,710 $ 140,000 Sep 1,800 $ 148,000 Oct 1,970 $ 150,000 Nov 970 $ 150,000 Dec 1,970 $ 120,000 Jan 1,510 $ 140,000 Feb 1,650 $ 130,000 Mar 1,450 $ 115,000 Apr 1,200 $ 112,000 May 1,210 $ 130,000 Jun 1,900 $ 154,000 Jul 1,890 $ 162,000 Aug 1,200 $ 112,000 Sep 1,210 $ 130,000 Oct 1,600 $ 143,000 Nov 1,700 $ 148,000 Dec 1,850 $ 143,000