1) Identifying Cost behavior

Cost A Cost B
Month Units produced Total Costs Cost/unit Total Costs Cost/unit
1 1500 1500 1 4500 3
2 3000 1500 0.5 5250 1.75
3 750 1500 2 3750 5

Cost A is fixed cost which remains same in total and vary in per unit cost
Cost B is Semi Variable cost which does not remains same in total and also in per unit cost
Cost C is VARIABLE cost which remains VARY in total and SAME in per unit cost
 Cost C
Total Costs Cost/unit
3000 2
6000 2
1500 2

Required:
1.  Use the regression output to develop the cost equation Y= f + vX by filling in the dollar amounts for f and
2.  What would the city of Rockville’s estimated costs be if its trucks drove 500,000 miles in year 7?
e dollar amounts for f and v.
0 miles in year 7?
2)
1.High low method
Years Total Cost Level of activity
Highiest 6 $ 1,550,000.00 $ 710,000.00
Lowest 1 $ 750,000.00 $ 225,000.00

Difference $ 800,000.00 $ 485,000.00

VariableCost /unit $ 1.65

y = Fixed cost + Variable cost per unit *X(no of units)

Total cost =$378865.98+$1.6494845X
2. total cost for 500000 miles travel
Total cost 378865.98+1.6495*(500000)
Total cost $ 1,203,608.25
Total Variable Cost Total fixed Cost
$ 1,171,134.02 $ 378,865.98
$ 371,134.02 $ 378,865.98

$ 1,542,268.04 $ 757,731.96
3) 1.REGRESSION ANALYSIS
A) Equation form
Y Intercept 441013
x Intercept 1.53
Y=441013 + 1.53 x

b) Annual Cost
Annual Cost = 441013 + 1.53*600000
Annual Cost $ 1,359,013.00

2.At 7th year ,it would be 7 times of annual cost

Annual cost (1359013*7) $ 9,513,091.00
000
4 Marginal income statement

.Variable Method(Marginal costing)

Sales 1000*250 $250,000
less :Variable Costs of sale
Variable Production cost 40000*.75 $30,000
Variable Selling and Administration 150000*90% $135,000

Contribution Margin $115,000

less :Fixed Costs
Manufacturing overhead $10,000
Selling and Administration $15,000 $25,000
Operating Profit $90,000