Question 2

Consumer Centered Manufacturers Ltd produces a finished product that is measured in metres. The following table gives information that relates metres of production to total costs:

Output/metresTotal Cost $29010,60044015,10039013,60057019,00033011,80027010,00051017,200

Required:

Use the High/low method of cost separation to do the following:

1. Determine the variable cost per metre of production.
2. Determine the amount of fixed costs involved in production.
3. Develop an equation that relates output to total costs.