Question:
Month X-Rays Taken X-Ray Costs
January...... 6,250 $28,000
February..... 7,000 29,000
March........ 5,000 23,000
April........ 4,250 20,000
May.......... 4,500 22,000
June......... 3,000 17,000
July......... 3,750 18,000
August....... 5,500 24,000
September.... 5,750 26,000
Question 1. Prepare a scattegraph using the data. Plot cost on the vertical axis and activity on the horizontal axis. Fit a line to your plotted points.
Question 2. Using the quick-and-dirty method, what is the approximate monthly fixed cost for X-Rays? The approximate variable cost per X-ray taken?
Question 3. Scrutinize the points on your graph, and explain why the high-low method would or would not yield an accurate cost formula in this situation.