QUESTION -
PART A - Wollongong Pathology is a medical testing laboratory situated in Wollongong. Dr. Curin Strong the CEO of the centre is in the process of making estimation on the cost of X-rays of the centre. The number of X-rays taken and X-ray costs over the last nine months in Wollongong Pathology are given below:
|
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
|
3,250
|
$16,000
|
Required:
(a) Using High-Low method, estimate the cost formula for X-ray costs.
(b) Estimate the cost of X-rays for October using both regression and high-low methods, assuming a least-square regression analysis estimated the total fixed costs to be $5,920 per month and the variable cost to be $3.38. The number of x-rays for October is expected to be 4,000. Comment on the accuracy of your high-low estimates.
Part B - SuperCools Company is the exclusive distributer for evolutionary two types of cooling bag Deluxe and Superior. The budget income statement for next period is as follows:
|
|
Deluxe
|
Superior
|
Total
|
|
Sales Mix Units sold
|
187 500
|
62 500
|
250 000
|
|
Revenues
|
$5 250 000
|
$3 125 000
|
$8 375 000
|
|
Variable
|
$3 375 000
|
$1 875 000
|
$5 250 000
|
|
Contribution margins
|
$1 875 000
|
$1 250 000
|
$3 125 000
|
|
Fixed Cost
|
|
|
$2 250 000
|
|
Profit
|
|
|
$ 875 000
|
Required: Calculate the estimated break-even point in units and dollars that the planned sales mix is attained.