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Board​ Games, Inc. makes board games. The following data pertains to the last six​ months:Direct Labor HoursManufacturing OverheadMonth 1​45,000​$295,000Month 2​60,000​$320,000Month 3​57,000​$323,000Month 4​52,000​$247,250Month 5​34,000​$178,200Month 6​25,000​$162,500Based on this​ data, what is the linear cost​ equation?

Respuesta :

Answer:

Explanation:

Variable cost = (C1-C2) / (X1-X2)

C1 = Total cost at high activity level of 625,000 = $ 162,500

C2 = Total cost at Low activity level of 45,000 = $ 295,000

X1 = high activity level = 625,000

X2 = Low activity level = 45,000

Variable cost = ($ 295,000 - $ 162,500) / (625,000 - 45,000)

= $ 132,500 / 580,000 = $ 0.23

Fixed cost = Total cost at high activity level - variable cost * units

= $ 162,500 - 0.23 * 625,000

= 162500 + 143750

= $ 306,250

Equation 0.23x +306,250

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