Sun Co.'s monthly sales and cost data for its operating activities of the past year follow. Management wants to use these data to predict future fixed and variable costs. (Dollar amounts are in thousands.)

Required
1. Prepare a scatter diagram for these data with sales volume (in $) plotted on the horizontal axis and total costs plotted on the vertical axis.
2. Estimate both the variable costs per sales dollar and the total monthly fixed costs using the high-low method. Draw the total costs line on the scatter diagram in part 1.
3. Use the estimated line of cost behavior and results from part 2 to predict future total costs when sales volume is (a) $100 and (b) $170.

Transcribed Image Text:

Month Sales Total Cost Month Sales Total Cost $195 97 87 73 $145 185 135 85 .175 115 $93 105 85 58 95 79 ..125 30s 105 . 155 95 215 10 81 6 110 12