Homework Answers
(1)
Total cost = 1700 x $27.43
= $46631
(2)
variable cost per unit = ($46631 - $22831)/1700
= $14
(3)
cost equation: y = $22831 + $14x
(4)
forecasted cost = 1900 x $14 = $26600
(5)
forecasted cost = $22831 + ($14 x 1900)
= $49431
(6)
dollar difference = $49431 - $26600 = $22831
therefore the difference equals fixed cost
the cost equation approach is more appropriate because it takes total cost into account.
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56,57
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