Question

Required information Exercise 6A-4 High-Low Method; Scattergraph Analysis (L06-10] [The following information applies to the questions displayed below.) Archer Company is a wholesaler of custom-built air-conditioning units for commercial buildings. It gathered the following monthly data relating to units shipped and total shipping expense: Month January February March April May June July Units Shipped 4 7 5 6 8 9 Total Shipping Expense $ 1,800 $ 2,300 $ 1,700 $ 2,000 $ 2,300 $ 3,400 $ 1,200 1

Required:

1-a. Prepare a scattergraph using the data given above. Plot cost on the vertical axis and activity on the horizontal axis.

Instructions:

1. On the graph below, use the point tool (January) to plot units shipped on the horizontal axis and the shipping expense on the vertical axis.

2. Repeat the same process for the plotter tools (February to July).

3. To enter exact coordinates, click on the point and enter the values of x and y.

4. To remove a point from the graph, click on the point and select delete option.

Answer 1

High low Method It is the technique used in managerial accounting to split the into fixed and variable components. mixed These are then used to colculate the average Variable cost per unit to obtain a linear cost volume function y = at bx in total cost te activity level -ولا formules for Variable lett for unit Y-7 - a Je total cost at lighost activity level y a total cost at lavest level No. of units ats highest activity level No. of units at laust activity level Here it is given in the question the units shisha and total shipping ephense first simply plot those hoints on the grhh simply without calculating the variable cost withat high-low merhod) Then we will show (compare the new are it with high low methore with the previrs che.

Date $roo Synod s you $300 "15,2 you) $3000 Ž grua Shinking experges 16 ouwe) lisay (9_2309) 14,1600) a $1500 $1003 *0,1909) $0 0 1 2 3 9 S 6 what we conclucle from this graph is that there is no lineer relationship between them and the shape of the graph is high love. Like from 14,1800) to 17,2300) first it is un than (7, 2300) to (5, 1000) is deras are some is rest from it. &teh 2 find verable wort from the formule 일식 here we have at highstoctivity in the gostion) y $3400 we have at lowest activity y = $1200 put this in formula Variable cost her unit = $3400-$ 1900 2900$920 9 9-1 herunit.

age No. Date Total fixed cost = کو رو دوگا۔ عوقود فيلا لدوفا - 200رو حوله cost volume formula دك22 +2و -2 Pur here a 2 كحال را هدا (دی را Here, we hut x-o (/2 +لوت ص غفلتة و 120 = کدعہ کو قواعد وید لو ۔ ردال دو تا هلا وهایده دعوت اختلا flot these points orgraph, similarly we cofre 4,5,6 x-axis Units shipped assume Sling exhere Pax Lapprys ر92,علم هوده 6- (20) C = (3,192) sos /ov بها بحركا-0 A مه 0 1 2 3 4 Youts shinned

Page No. Date ub? Vel, there is an approximately lines seletionikin between shinning exhorse and the number of units shipped Because there is an equal difference with there points (hloted on the graphs)