Presented below is the production data for the first six months of the year for the mixed costs incurred by Scott Company. $$\begin{array} { l l l }
\text { Month } & \text { Cost } & \text { Units } \
\text { January } & \$ 4,890 & 4,100 \
\text { February } & 4,024 & 3,200 \
\text { March } & 6,480 & 5,300 \
\text { April } & 8,840 & 7,500 \
\text { May } & 5,800 & 4,800 \
\text { June } & 7,336 & 6,600
\end{array}$$ Scott Company uses the high- low method to analyze mixed costs. The cost function is stated as:
A) Y = $3,562.30 + $0.144X
B) Y = $440 + $1.12X
C) Y = $7,850 + $0.132X
D) Y = $107.20 + $1.416X

Question

Presented below is the production data for the first six months of the year for the mixed costs incurred by Scott Company. $$\begin{array} { l l l } 
\text { Month } & \text { Cost } & \text { Units } \
\text { January } & \$ 4,890 & 4,100 \
\text { February } & 4,024 & 3,200 \
\text { March } & 6,480 & 5,300 \
\text { April } & 8,840 & 7,500 \
\text { May } & 5,800 & 4,800 \
\text { June } & 7,336 & 6,600
\end{array}$$ Scott Company uses the high- low method to analyze mixed costs. The cost function is stated as:
A) Y = $3,562.30 + $0.144X
B) Y = $440 + $1.12X
C) Y = $7,850 + $0.132X
D) Y = $107.20 + $1.416X

Quizplus · Accepted Answer

The high-low method calculates the variable cost per unit as (Cost at highest activity - Cost at lowest activity) / (Highest activity units - Lowest activity units). Using April and February data: ($8,840 - $4,024) / (7,500 - 3,200) = $1.12 per unit. The fixed cost is calculated by subtracting the total variable cost from the total cost at either high or low activity level. Using February data: $4,024 - ($1.12 * 3,200) = $440. Thus, the cost function is Y = $440 + $1.12X.

Presented Below Is the Production Data for the First Six