Question - High-Low Method; Scattergraph Analysis
Zerbel Company, a wholesaler of large, custom-built air conditioning units for commrcial buildings, has noticed considerable fluctuation in its shipping expense from month to month, as shown in the attachment:
| Month |
Units Shipped |
Total Shipping Expense |
|
January
|
4
|
$2,200
|
|
February
|
7
|
$3,100
|
|
March
|
5
|
$2,600
|
|
April
|
2
|
$1,500
|
|
May
|
3
|
$2,200
|
|
June
|
6
|
$3,000
|
|
July
|
8
|
$3,600
|
Comment on the accuracy of the high-low estimates assuming a least-squares regression analysis estimated the total fixed costs to be $1,010.71 per month and the variable cost to be $317.86 per unit.