1. Felix & Co. reports the following information about its sales and cost of sales. Draw an estimated line of Vcost behavior using a scatter diagram, and compute fixed costs and variable costs per unit sold. Then use the high low method to estimate the fixed and variable components of the cost of sales.
|
Period |
Units Sold |
Cost of Sales |
Period |
Units Sold |
Cost of Sales |
|
1 |
0 |
$2,500 |
6 |
2,000 |
5,500 |
|
2 |
400 |
3,100 |
7 |
2,400 |
6,100 |
|
3 |
800 |
3,700 |
8 |
2,800 |
6,700 |
|
4 |
1,200 |
4,300 |
9 |
3,200 |
7,300 |
|
5 |
1,600 |
4,900 |
10 |
3,600 |
7,900 |
2.Use spreadsheet software to use ordinary least squares regression to estimate the cost equation, including fixed and variable cost amounts.