Question

Garfield Company manufactures a popular brand of dog repellant known as Dog Gone It, which it sells in gallon-size bottles with a spray attachment. The majority of Garfield's business comes from orders placed by homeowners who are trying to keep neighborhood dogs out of their yards. Garfield's operating information for the first six months of the year follows: Number of Operating Month Bottles Sold Cost January 1,060 $10,770 February 1,460 15,670 March 1,850 15,920 April 2,420 19,540 May 3,420 27,820 June 3,800 34,820 Required: 3. Using the high-low method, calculate Garfield's total fixed operating costs and variable operating cost per bottle. (Do not round your intermediate calculations. Round your variable cost per unit answer to 2 decimal places and fixed cost answer to the nearest whole number.) Variable Cost per Unit Fixed Cost

Answer 1

3. High low method
Variable Cost per unit = ($34820 - 10770) / (3800 - 1060) = $8.78 per unit
Fixed Cost = $34820 - 3800 x 8.78 = $1456

4.

	Coefficients
Intercept	2062.752
X Variable 1	8.006

5.

Regression Statistics
Multiple R	0.979
R Square	0.959
Adjusted R Square	0.949
Standard Error	2020.119
Observations	6

Number of bottles explain about 96% of variability

6.
Total Cost = $2062.752 + $8.006 x Number of Bottles

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