Gian Carl M. Macuha
Summary
Scatter Graph of the Graphical Method
Scatter Graph of the Graphical Method
• It uses a graphical solution in separating mixed costs.
• It is used to determine relationship between two
variables (x and y).
• The x- variable is the dependent variable
• The y-variable is the independent variable
Illustration:
• ABC manufacturing company has the following data
for its electric consumption in the production area for
the half of the year 2020:
Month
January
Production Level
in Units
1,000
Amount in US
Dollars
4,890
February
1,100
5,010
March
900
4,820
High-Low Method
April
850
4,850
• Does not necessarily need for graphical solution.
May
1,050
4,900
June
750
4,700
• It selects and uses the highest and lowest values of x
(production level) to compute for the slope and the yintercept.
Step 1 Solve for the Y-intercept (Fixed cost)
Y = mx + b
5,010 = (0.886) (1,100) + b
5,010 = 974.60 + b
5,010 – 974.60 = b
4,035.40 =
Under the Scatter Graph Method, our fixed cost is
approximately at 4,100.00. But, Under the High-low
Method, our fixed cost is around 4,035.40