Question
Salsabil company produces different products through automation. The company incurs large amount of overheads in the factory on power alone, that is semi-variable in nature.The
Salsabil company produces different products through automation. The company incurs large amount of overheads in the factory on power alone, that is semi-variable in nature.The details of the power costs for 6 months ending, September 2020 are provided below.Months Machine Hours Power Cost (OMR)April50,000400,000May 60,000460,000June 40,000340,000July 45,000370,000August70,000520,000September75,000550,000You are required to use both High and low method and linear regression analysis to separatethe fixed and variable costs.High and low methods should be calculated by taking the following parameters into consideration.1.Calculate the variable cost per unit.2.Calculate the fixed cost3.Construct the cost function.Linear regression analysis should be calculated by the application of the Linear regression analysis formula.
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