3. (35 points) The Davis Company has estimated costs for the following monthly production levels:
Production volume (units)
Cost A
Cost B
Cost C
Cost D
Cost E
Cost F
Cost G
Cost H
Total manufacturing costs
Required:
a. Identify each cost as a variable, fixed, or mixed cost.
Cost A
Cost B
Cost C
Cost D
Cost E
Cost F
Cost G
Cost H
100
200
300
$2,000
$4,000
$6,000
600
900
1,200
1,800
1,800
1,800
1,200
2,400
3,600
2,000
2,000
2,000
2,400
3,600
4,800
1,100
1,600
2,100
1,500
1,500
1,500
$12,600
$17,800
$23,000
b. Measure the following equation using the high-low method (hint: use the total manufacturing
costs and units from the first and third columns.):
Total manufacturing costs = a + b (units)