Question
The Roasted Chicken House Restaurant has provided you with the following information on its costs at various levels of monthly sales. Monthly sales units 400
The Roasted Chicken House Restaurant has provided you with the following information on its costs at various levels of monthly sales. Monthly sales units 400 800 1,200 Cost of food 9,000 10,000 17,000 Supplies 400 800 1,200 Other operating costs 2,000 4,000 6,000 Utilities 500 900 1300 Building rent 2,000 2,000 2,000 Depreciation 200 200 200 Total cost 14,100 17,900 27,700 Required 1. Draw scatter graph for each cost items and explain cost behaviour. 2. Identify each cost as variable, fixed or semi-variable (mixed) cost with reasons. 3. Segregate semi-variable cost, if any, using high-low method and develops an equation for each cost items. 4. Segregate semi-variable cost, if any, using least square method and develops an equation for each cost items. 5. Predict total cost for monthly budgeted outputs for 1,000 units as per results of (3) above. 6. Predict total cost for monthly budgeted outputs for 1,000 units as per results of (4) above. 7. Compare results of above (5) and (6), and draw conclusion about reliability of these two results with valid reasons.
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