Question 1: Computer Accessories Inc. incurred the following production costs to

Question

Question 1: Computer Accessories Inc. incurred the following production costs to manufacture mouse pads. Using the high/low cost estimation method, what are the estimated productions costs if Computer Accessories Inc. produced 175,000 mouse pads? (4 points)

Refer to above answered question 1:  These data were entered into a regression program, resulting in the following output. Use this output to determine expected production costs if Computer Accessories Inc. produces 175,000 mouse pads.

Intercept 19,973

X Coefficient .0307

R Square .9981

MONTH Number of Mouse Pads Production Costs Estimated Production Cost July 300,000 $29,383 ? August 100,000 $22,980 ? September 125,000 $23,975 ? October 250,000 $27,450 ? November 325,000 $29,726 ? December 50,000 $21,476 ?

Explanation / Answer

Variable Cost per Unit =(y2 y1)/(x2 x1)

y2 is the total cost at highest level of activity;
y1 is the total cost at lowest level of activity;
x2 are the number of units/labor hours etc. at highest level of activity; and
x1 are the number of units/labor hours etc. at lowest level of activity

Variable cost per unit = (29726-21476)/(325000-50000)

= $0.03

Cost volume formula Y= a+BX

29726=a+(0.03* 325000)

a = 29726+9750

a = 19976

a= fixed cost

Y = Total cost

X = no of units

Cost of 175000 = 19976+(175000*0.03) = 25226

Answer 2

Y = mx + b

where Y = total cost

          m = the slope of the line, i.e., unit variable cost = 19973

          X = the number of units of activity=175000

          b = the y-intercept, i.e., total fixed costs

Y=19973 * (

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