Question

Below are the processing costs of Darnell Products observed over the last 10 months:

Month	Units Produced	Processing Cost
1	7,500	$44,000
2	11,000	60,000
3	12,500	54,000
4	5,500	20,000
5	9,000	47,000
6	8,500	52,000
7	4,500	22,000
8	7,000	41,000
9	11,500	52,000
10	6,000	41,000

1. Use the high low method to determine the variable cost per unit and fixed cost per month. Express your results in the form of a linear equation y = a + bx.                                                                                                                                                                                    (6 marks)

2. Predict the total processing cost if 22,000 units are produced.                                      (4 marks)

Answer 1

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