EXERCISE 5-2 (45 MINUTES)

2. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
2. a. See the scattergraph on the following page. b. (Note: Students’ answers will vary due to the imprecision of this method of estimating variable and fixed costs.) Total cost at 5 units shipped per month [a point fal-ling on the regression line in (a)] ... $2,000Less fixed cost element (intersection of the Y axis) .... 1,000Variable cost element ... $1,000$1,000 ÷ 5 units = $200 per unit. The cost formula is $1,000 per month plus $200 per unit shipped or Y = $1,000 + $200X. where X is the number of units shipped.