BBUS 2541 Study Guide - Variable Cost, Scatter Plot, Fixed Cost
Document Summary
The requirement asks for an estimate based on the visually-fit cost line. Therefore, answers will vary on this requirement because of variation in the visually-fitted lines. Variable maintenance cost per tour kilometre = (18,750r-16,500r) / (30,000 kms. = . 125r r denotes the real, brazil"s national currency. Variable maintenance cost at 12,000 kms. (. 125r 12,000) Total maintenance cost per month = 15,000r + . 125rx , where x denotes tour kilometres traveled during the month. Variable utility cost at 700 hours (. 00 700 hours) Monthly utility cost = ,000 + . 00 x , where x denotes hours of operation. Variable-cost estimate based on the scatter diagram on the next page: 6-34 (continued: estimation of variable- and fixed-cost components of cost behaviour using least- squares regression: Cost predictions at 300 hours of operation: (a) Utility cost = ,000 + (. 00)(300) = ,200 (b) This cost prediction was simply read directly from the visually-fitted cost line.
