Question
Zachary Woodcraft Company manufactures antique wooden cabinets to house modern televisions. The Company began operations in January of last year. Sidney Myrick, the owner, asks
Zachary Woodcraft Company manufactures antique wooden cabinets to house modern televisions. The Company began operations in January of last year. Sidney Myrick, the owner, asks for your assistance. He believes that he needs to better understand the cost of the cabinets for pricing purposes. You have collected the following data concerning actual production over the past year:
Number of | ||||||
Month | Cabinets Produced | Total Cost | ||||
January | 870 | $ | 21,300 | |||
February | 3,650 | 33,100 | ||||
March | 1,960 | 29,600 | ||||
April | 630 | 18,200 | ||||
May | 1,620 | 28,300 | ||||
June | 1,330 | 27,300 | ||||
July | 1,160 | 25,700 | ||||
August | 1,790 | 31,400 | ||||
September | 2,300 | 32,700 | ||||
October | 2,990 | 31,500 | ||||
November | 3,330 | 32,100 | ||||
December | 300 | 9,650 | ||||
Required
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To understand the departments cost behavior, you decide to plot the points on graph paper and sketch a total cost line.
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(1) Enter the number of units and their costs in increasing order.
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Using the high-low method, compute the total cost equation for the preceding data.
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(1) Compute the variable cost per unit.
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(2) Compute total fixed costs.
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(4) Calculate the total cost assuming 1,900 cabinets are made.
Using the high-low method, compute the total cost equation for the preceding data. Compute the variable cost per unit, total fixed costs, and total cost assuming 1,900 cabinets are made. (Round variable cost per unit answer to 4 decimal places.)
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