Question

The Mona Western University operates a Laundromat, solely for the purpose of providing laundering services to students in residence. You have been hired as an accounting student, to analyze the cost of the laundering services. The university 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 students 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 Students Laundering August 188.800 1,200 September 213,100 1,650 October 232,000 2,000 November 248,200 2,300 December 261,700 2,550 January 269,800 2,700 February 242,800 2,200 March 250,900 2,350 April 253,600 2,400 May 226,600 1,900 June 169,900 850 July 161,800 700 d) From the data set given, generate the scatter diagram for Mona Western University, clearly showing the line of best fit (trend line). (4 marks) e) Using the trend line, determine Mona University’s fixed cost per month and the variable cost per student. (Use 0 & 2,500 students.) (4 marks) f) Based on the scatter gram, what is the equation of the total mixed cost function? (3 marks) g) Which of the two methods would be more appropriate? Explain your answer. (2 mark

Answer 1

d) From the data set given, generate the scatter diagram for Mona Western University, clearly showing the line of best fit (trend line). (4 marks)
D) , e) and f)
Variable cost per unit	54	per student laundering
Fixed cost	124000
f) Y = 54X + 124,000

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.

# of Students Laundering vs Total laundering Cost $300,000.00 $250,000.00 $200,000.00 y = 54x + 124000 Month August September Oct Nov Dec Jan Feb Mar Apr May Jun July Total Laundering Costs $150,000.00 # of Students Total Laundering Laundering Costs 1200 $ 188,800.00 1650 $ 213,100.00 2000 $ 232,000.00 2300 $ 248,200.00 2550 $ 261,700.00 2700 $ 269,800.00 2200 $ 242,800.00 2350 $ 250,900.00 2400 $ 253,600.00 1900 $ 226,600.00 850 $ 169,900.00 700 $ 161,800.00 $100,000.00 $50,000.00 Plot Area 0 500 2500 3000 1000 1500 2000 # of Students Laundering