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    Cost Behaviour Using a Scatter Diagram

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    Phenix Corporation reports the following information about its sales and cost of sales. Draw an estimated line of cost behavior using a scatter diagram, and compute fixed costs and variable costs per unit sold. Then use the high-low method to estimate the fixed and variable components of the cost of sales.

    Period Units Sold Cost of Sales Period Units Sold Cost of Sales
    1 0 $2,500 6 2,000 5,500
    2 400 3,100 7 2,400 6,100
    3 800 3,700 8 2,800 6,700
    4 1,200 4,300 9 3,200 7,300
    5 1,600 4,900 10 3,600 7,900

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    https://brainmass.com/business/management-accounting/cost-behaviour-scatter-diagram-458783

    Solution Summary

    The solution uses the high-low method to estimate the fixed and variable components of the cost of sales.

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