PROBLEM SET B Problem 21-1B Cost estimation using high-low method P1 Sun Co.'s monthly data...
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PROBLEM SET B Problem 21-1B Cost estimation using high-low method P1 Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. 7... Month Units Sold Total Cost 1.... 195,000 $ 97,000 2.... 125,000 87,000 105,000 73,000 155,000 89,000 95,000 81,000 215,000 110,000 3.... 4 .... Month Units Sold 145,000 8 185,000 9 135,000 10 85,000 11 175,000 12 115,000 Total Cost $ 93,000 105,000 85,000 58,000 95,000 79,000 5 Required 1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. 2. Use the answers for variable and fixed costs from part 1 to predict future total costs when sales volume is (a) 100,000 units and (b) 170,000 units. Analysis Component page 799 3. Use these data to prepare a scatter diagram. Draw an estimated line of cost behavior and determine whether the cost appears to be variable, fixed, or mixed
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