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/metres Total Costs $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. (5 marks)
2. Determine the amount of fixed costs involved in production. (4 marks)
3. Develop an equation that relates output to total costs.(3 marks)