Belle Company produces and sells rattan baskets.

The number of units produced and the corresponding total

production costs for the six months, which are representatives for the year, are as follows:
Month Units produced Production costs
April 500 4,000
May 700 8,000
June 900 6,000
July 600 7,500
August 800 8,500
September 550 7,250

Based on the given information and using the least square method of computation, compute the variable
production cost per unit, and the monthly fixed productions cost. Compare it with high-low method.

X Y XY X2
500 4,000 2,000,000 250,000
700 8,000 5,600,000 490,000
900 6,000 5,400,000 810,000
600 7,500 4,500,000 360,000
800 8,500 6,800,000 640,000
550 7,250 3,987,500 302,500
4,050 41,250 28,287,500 2,852,500

B = 6 (28,287,500) – (4,050) (41,250)/ 6 (2,852,500) – (4,050) 2

B = 169,725,000 – 167,062,500/ 17,115,000 – 16,402,500

B = 2,662,500/ 712,500

B = 3.74/unit

A = 41,250 – 3.74 (4,050)/6

A = 41,250 – 15,147/6

A = 4,350

High low: 6,000 = a + 5 (900)

B = 6,000 – 4,000 / 900 – 500 A = 6,000 – 4,500

B = 5/ unit A = 1,50
 1. As part of a cost study, the cost accountant of Shinly Corporation has recorded the cost of
operations at seven different levels of materials usage. The records show the following:
Kilos of materials Cost of
operation
80 P 800
60 480
20 320
120 1,200
140 1,280
40 480
100 1,040
1.1. Using the high low method, the variable cost of operations per kilo of materials used is?
1.2. Using the high low method, the fixed cost of operations is?
1.3. Using the least squares method, the average rate of variability per kilo of material used is?
1.4. Using the least square method, the fixed portion of the cost is?

1.1
B = 1,280 – 320/140-20
B = 960/120
B = 8/kilo

1.2 a = 1,280 – 8 (140)

a = 1,280 – 1,120
a = 160

1.3

x y xy X2
80 800 64,000 6,400
60 480 28,800 3,600
20 320 6,400 400
120 1,200 144,000 14,400
140 1,280 179,200 19,600
40 480 19,200 1,600
100 1,040 104,000 10,000
560 5,600 545,600 56,000

B = 7 (545,600) – (560) (5,600)/ 7 (56,000) – (560) 2

B = 3,819,200 – 3,136,000/ 392,000 – 313,600
B = 683,200/ 78,400
B = 8.71
A = (5,600) – 8.71 (560)/ 7
A = 5,600 – 4,876.60 / 7
A = 103.34