Quinton Woodcraft Company (QWC) manufactures "antique" wooden cabinets to house modern televisions. QWC began operations in January of last year.
Joe Quinton, the owner, asks for your assistance. He believes that he needs to better understand the cost of the cabinets for pricing purposes.
You have collected the following data concerning actual production over the past year:
|
Month
|
Number of Cabinets Produced
|
Total Cost
|
|
January
|
830
|
|
$
|
21,700
|
|
|
February
|
3,650
|
|
|
32,700
|
|
|
March
|
1,940
|
|
|
29,600
|
|
|
April
|
620
|
|
|
18,800
|
|
|
May
|
1,570
|
|
|
28,700
|
|
|
June
|
1,290
|
|
|
27,100
|
|
|
July
|
1,110
|
|
|
25,700
|
|
|
August
|
1,720
|
|
|
31,200
|
|
|
September
|
2,280
|
|
|
32,500
|
|
|
October
|
2,950
|
|
|
31,900
|
|
|
November
|
3,290
|
|
|
32,500
|
|
|
December
|
310
|
|
|
16,600
|
|
Required:
a. To understand the department's cost behavior, you decide to plot the points on graph paper and sketch a total cost line.
(1) Enter the number of units and their costs in increasing order.
Month
Number of Cabinets Produced
Total Cost
b. Using the high-low method, compute the total cost equation for the preceding data. (Round "Cost per unit" answer to 4 decimal places. Round your final answers to the nearest whole dollar amount.)
(1) Compute the variable cost per unit.
Variable cost per unit -
(2) Compute total fixed costs
Total fixed costs -
(3) Calculate the total cost assuming 1,500 cabinets are made.
Total costs