Question

The Browne's Town housing Scheme operates a Laundromat, solely for the purpose of providing
laundering services to Tenants in residence. You have been hired as an accountant , to
analyze the cost of the laundering services. The Housing administration has assembled the data
for a twelve month period pertaining to the monthly total costs of providing the service and the
corresponding number of Tenants who used the laundering facilities each month.
The table below shows the monthly data collected over the academic year under review.

Month	Total Laundering Costs	# of Tenants Laundering
August	188000	1200
September	213100	1650
October	232000	2000
November	248200	2300
December	261700	2550
January	269800	2700
February	242800	2200
March	250900	2350
April	253600	2400
May	226600	1900
June	169900	850
July	161800	700

e) Using the trend line, determine Browne Town's Housing Scheme fixed cost per month and the variable cost
per Tenant. (Use 0 & 2,500 Tenants)
f) Based on the scatter gram, what is the equation of the total mixed cost function?

g) Which of the two methods would be more appropriate? Explain your answer.

Answer 1

e) Using the trend line, determine Browne Town's Housing Scheme fixed cost per month and the variable cost
Fixed Cost	123715
Variable Cost per Unit	$54.12	per tenant
f) Based on the scatter gram, what is the equation of the total mixed cost function?
Cost Equation Y = 123715 + $54.12X
g) Which of the two methods would be more appropriate? Explain your answer.
g)The scatter graph method is more reliable since it considers all data points and it gives accurate results while the high-low method which considers the highest level and lowest level of activity only.

Total Laundering Costs vs # of Tenants y=54.115x+123715 300000 250000 2300 200000 7 Month 8 August 9 September 10 October 11 November 12 December 13 January 14 February 15 March 16 April 17 May 18 June 19 July # of Total Tenants Laundering Laundering Costs 1200 188000 1650 213100 2000 232000 248200 2550 261700 2700 269800 2200 242800 250900 253600 1900 226600 850 169900 7001 161800 Total Laundering Costs 150000 100000 2350 50000 0 5 00 1000 2000 2500 3000 1500 # of Tenants 20