The Following Data Were Obtained from the Accounting Information System

question 66

Essay

The following data were obtained from the accounting information system of POC Corporation:
Production
Units Raw Materials Factory Manager
Month Produced Used Supplies Salary
January 60 $1,560 $550 $3,000
February 80 2,000 700 3,000
March 50 1,300 475 3,000
April 30 775 325 3,000
a)Describe the behaviour of each of the costs shown above as fixed, variable, or mixed. You may wish to draw scatter plots or analyze the cost using your knowledge of costs and the actual variation in cost pattern from above (in other words, perform an informal analysis at the account level).
b)Use the data for February and March and the two-point method to determine a cost function for any mixed cost(s).
c)Use the high-low method to determine a cost function for any mixed cost(s).

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Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing the ownership interest of shareholders.

Debt Refunding

The process of replacing an existing debt obligation with a new one, often with more favorable terms.

Ordinary Income

Earnings derived from standard business operations and not classified as capital gains or dividend income.

Extraordinary Income

Uncommon and infrequent gains not related to the normal operations of a business.