prepare an income statement using the traditional format; then prepare a contridution margin income statement for The Caf$.$

E$6-23$A Use the high$-$low method $($Learning Objective $4)$

Zebra has never used CVP analysis in its $6-$year production history. The manager provided the following sales and cost data for the first $6$ years of operation:

$\backslash$table$[[$Year$,$Costs of manufacturing,Units produced$],[2008..........................................................,$$ $96,000,32,000],[2009..........................................................,$$ $96,500,33,500],[2010..........................................................,$$ $96,500,32,000],[2011..,$$ $97,000,34,000],[2012..........................................................,$$ $99,000,35,000],[2013...........................................................,$$$102,000,36,000]]$

Requirements

Using the high$-$low method, estimate the cost equation for the manufacture of the product.

Check whether the cost equation you calculated in requirement $1$ would represent the actual costs of manufacturing from year $2011$ to $2012.$ What does this tell you about the high$-$low method of estimating a cost equation?