Problem 2-27A (Algo) Estimating fixed and variable cost LO 2-6

Jordan Woodcraft Company manufactures antique wooden cabinets to house modern televisions. The Company began operations in January of last year. Sidney Myrick, 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:

	Number of
Month	Cabinets Produced		Total Cost
January	830		$	21,700
February	3,650			32,500
March	1,930			29,700
April	620			18,800
May	1,590			28,400
June	1,260			27,300
July	1,140			25,800
August	1,780			31,100
September	2,280			32,700
October	2,920			31,900
November	3,280			32,100
December	350			12,700

Required

A. To understand the departments cost behavior, you decide to plot the points on graph paper and sketch a total cost line.

1. (1) Enter the number of units and their costs in increasing order.

B. Using the high-low method, compute the total cost equation for the preceding data.

1. (1) Compute the variable cost per unit.

2. (2) Compute total fixed costs.

3. (4) Calculate the total cost assuming 2,100 cabinets are made.

Enter the number of units and their costs in increasing order.

Month	Number of Cabinets Produced	Total Cost

Using the high-low method, compute the total cost equation for the preceding data. Compute the variable cost per unit, total fixed costs, and total cost assuming 2,100 cabinets are made.

Variable cost per unit
Total fixed costs
Total costs