Answer:
a.
C(y) = mx + b
y = cost in dollars
x = amount of chemical
m = per unit variable cost
b = fixed cost
b.
Use High low Method to calculate the Variable cost from the total cost given
Variable Cost = ( Highest activity cost - Lowest activity cost ) / ( Highest Number of Units - Lowest Number of Units )
Variable Cost = ( $2,200 - $1,200 ) / ( 150 - 50 )
Variable Cost = $1,000 / 100
Variable Cost = $10 per unit
Fixed Cost = $2,200 - ( 150 x $10 )
Fixed Cost = $2,200 - $1,500
Fixed Cost = $700
c.
Contribution Per Unit = Price - Variable cost
Contribution Per Unit = $15 - $10
Contribution Per Unit = $5
Break-even point = $700 / $5
Break-even point = 140 Pounds
d.
Revenue = 140 x $15 = $2,100
Cost = 140 x 10 = $1,400
