Homework SourseQ1 Presented below are data related to the shipping costs fo
Q1)
Presented below are data related to the shipping costs for the Almond Factory:
Month
Distribution costs (y)
Number of shipments (x)
Jan
$4,918
3500
Feb
$4,245
2650
Mar
$5,205
3850
Apr
$4,532
2999
May
$4,544
3002
Jun
$5,025
3650
Using the high-low method find:
1) The sloe is $---------------- per Number of shipments, rounded to the nearest $0.01.
2) The Fixed cost or intercept is $------------
3) If the number of shipments in August will be 4,200, the overhead cost will be $----------
Please explain how to solve part 3
| Month | Distribution costs (y) | Number of shipments (x) |
| Jan | $4,918 | 3500 |
| Feb | $4,245 | 2650 |
| Mar | $5,205 | 3850 |
| Apr | $4,532 | 2999 |
| May | $4,544 | 3002 |
| Jun | $5,025 | 3650 |
Solution
Variable cost per shipment=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)
=(5205-4245)/(3850-2650)
=$0.8
Fixed cost=5205-(3850*0.8)=$2125
Total overhead cost=2125+(0.8*4200)=$5485(Note:Total fixed cost and variable cost.unit do not change with change in units].
