Woodfield Company makes bed linens. During the first six months of 2000 Woodfield had the following production costs:

1. Use the high-low method to compute the monthly fixed cost and the variable cost rate.
2. Plot the costs on a scattergraph.
3. Interpretive Question: Based on your scattergraph, do you think the fixed costs and the variable cost rate determined in (1) are accurate? Why?

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Month Units Produced Total Costs January February March 10,000 $ 68,000 20,000 100,000 15,000 90,000 April 8,000 52,000 May 17,000 94,000 June 12,000 74,000