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The Graph Below Was Produced After Recording the Processing Costs

question 79

Essay

The graph below was produced after recording the processing costs of Oki Products observed over the last 10 months using the following data:
$\begin{array}{|r|r|r|}\hline \text { Month } & \text { Units Produced } & \text { Processing Costs } \\\hline 1 & 7,500 & \$ 44,000 \\\hline 2 & 11,000 & 52,000 \\\hline 3 & 15,000 & 59,000 \\\hline 4 & 5,500 & 38,000 \\\hline 5 & 9,000 & 47,000 \\\hline 6 & 8,500 & 52,000 \\\hline 7 & 2,500 & 28,000 \\\hline 8 & 7,000 & 41,000 \\\hline 9 & 11,500 & 52,000 \\\hline 10 & 6,000 & 41,000\\\hline\end{array}$
Required:
a.Using the graph identify the monthly fixed costs.What additional information might you determine from the graph?
b.The chart above indicates total processing costs of $47,000 at a level of 9,000 units for month 5.Using this level of activity and your fixed costs determined in a,calculate the variable cost per unit to the nearest cent.Express your results in the form of a linear equation y = a + bx.
c.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.
d.Comment on the differences between the results in b and c.Which result would you consider more accurate and why?
$The graph below was produced after recording the processing costs of Oki Products observed over the last 10 months using the following data: \begin{array}{|r|r|r|} \hline \text { Month } & \text { Units Produced } & \text { Processing Costs } \\ \hline 1 & 7,500 & \$ 44,000 \\ \hline 2 & 11,000 & 52,000 \\ \hline 3 & 15,000 & 59,000 \\ \hline 4 & 5,500 & 38,000 \\ \hline 5 & 9,000 & 47,000 \\ \hline 6 & 8,500 & 52,000 \\ \hline 7 & 2,500 & 28,000 \\ \hline 8 & 7,000 & 41,000 \\ \hline 9 & 11,500 & 52,000 \\ \hline 10 & 6,000 & 41,000\\ \hline \end{array} Required: a.Using the graph identify the monthly fixed costs.What additional information might you determine from the graph? b.The chart above indicates total processing costs of $47,000 at a level of 9,000 units for month 5.Using this level of activity and your fixed costs determined in a,calculate the variable cost per unit to the nearest cent.Express your results in the form of a linear equation y = a + bx. c.Use the high low method to determine the variable cost per unit and fixed cost per month.Express your results in the form of a linear equation y = a + bx. d.Comment on the differences between the results in b and c.Which result would you consider more accurate and why?$

Distinguish between variable and fixed costs in pricing decisions.

Understand the variable cost method of cost-plus pricing and its application.

Understand the concepts of cost centers, profit centers, and investment centers and their differences.

Comprehend the structure and implications of centralized and decentralized business organizations.

Definitions:

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Weakness

A term used in SWOT analysis to denote internal limitations or areas where a business or individual performs poorly.

SWOT Analysis

A strategic planning tool used to identify and understand the Strengths, Weaknesses, Opportunities, and Threats related to a business or project.

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