Beard Enterprises Has Collected the Following Data in Order to Analyze

question 151

Essay

Beard Enterprises has collected the following data in order to analyze the behavior of their costs:
$$\begin{array} { | c | c | c | } \hline \text { Month } & \text { Units Produced } & \text { Total Cost } \\\hline \text { January } & 17,500 & \$ 20,500 \\\hline \text { February } & 27,500 & \$ 21,500 \\\hline \text { March } & 25,000 & \$ 25,000 \\\hline \text { April } & 35,000 & \$ 21,500 \\\hline \text { May } & 47,500 & \$ 25,500 \\\hline \text { June } & 22,500 & \$ 18,500 \\\hline\end{array}$$
(a) Using the high-low method, calculate the variable cost per unit and the estimated fixed costs.
(b) Using the resulting relationship, predict the costs if they produce 28,000 units in a future period.

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Definitions:

Conceptual Framework

A set of coherent principles and ideas that guide the development, preparation, and interpretation of financial reports, ensuring consistency and comparability.

Financial Statements

Financial statements are comprehensive reports created to highlight an organization's financial performance, financial position, and cash flows over a certain period, commonly including the balance sheet, income statement, and cash flow statement.

Conceptual Framework

A system of ideas and objectives that lead to the creation of a consistent set of rules and standards for financial accounting and reporting.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the government.