Question 5

Time: 33 minutes

Total: 20 marks

Below are the processing costs of Darnell Products observed over the last 10 months:

Month	Units Produced	Processing Cost
1	7,500	$44,000
2	11,000	60,000
3	14,500	58,770
4	5,500	20,000
5	9,000	47,000
6	8,500	52,000
7	3,500	25,000
8	4,000	21,000
9	11,500	52,000
10	6,000	41,000

a- Use the high low method to determine the variable cost per unit and fixed cost per month. Express your results in the form of a linear equation y = a + bx. (15 marks)

b- Predict the total processing cost if 19,000 units are produced.(5 marks)