Homework Answers
a,
| high | Low | change | |
| unit | 2400 | 2150 | 250[2400-2150] |
| cost | 3020 | 2795 | 225[3020-2795] |
variable cost = 225/250
=0.9$ per unit
3020= fixed cost + 0.9*2400
3020-2160= fixed cost
fixed cost=860$
b.2200hotdogs
| sales | 5500 | 2200*2.50 |
| less: | ||
| fixed cost | 860 | |
| variable cost | 1980 | [0.9*2200] |
| net profit | 2660$ | [5500-860-1980] |
c.break even = fixed cost/contribution margin
contribution margin = sales-variable cost
=2.50-0.9
=1.6$
=860/1.6
=538 units must be sold to break even( no profit no loss.)
d.linear regression is a method that find out relationship between continuous variables
variable should be plotted on straight line
Y= a +x+e
Y is dependent variable
X is independent variable
a is intercept of regression line
b is slope of regression line
e is regression residual
whereas high low method finds difference between highest and lowest activity. it finds out variable cost per unit
and reduce it from total cost to find fixed cost.
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126,259
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164
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131
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149
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145
126,886
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155
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171
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February
140
123,748
March
149
130,929
April
145
126,259
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128,811
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123,261
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136
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