Question

EXERCISE 3-2 Scattergraph Analysis [LO2] Oki Products, Ltd., has observed the following processing costs at various levels of activity over the last 15 months: Month Units Produced 4,500 11,000 12,000 5,500 9.000 10,500 7,500 5,000 11,500 6,000 8,500 10,000 6,500 9,500 8,000 Processing Cost $38,000 $52,000 $56,000 $40,000 $47,000 $52,000 $44,000 $41,000 $52,000 $43,000 $48,000 $50,000 $44,000 $48,000 $46,000 Required: 1. Prepare a scattergraph using the above data. Plot cost on the vertical axis and activity on the horizontal axis. Fit a line to your plotted points using a ruler. 2. Using the quick-and-dirty method, what is the approximate monthly fixed cost? The approximate vari- able cost per unit processed? Show your computations.