Question

Use the following information about unit sales and total cost of sales to prepare a scatter diagram. Draw a cost line that reflects the behavior displayed by this cost. Determine whether the cost is variable, step-wise, fixed, mixed, or curvilinear.

Period	Unit sales	Cost of sales	Period	Unit sales	Cost of sales
1	760	\(590	9	580	\)390
2	800	560	10	320	240
3	200	230	11	240	230
4	400	400	12	720	550
5	480	390	13	280	260
6	620	550	14	440	410
7	680	590	15	380	260
8	540	430

Short answer

The cost is curvilinear because the increase and decrease in the cost are not-constant and according to the activity level.

Step-by-step solution

Definition of Step-Wise Cost

The cost will remain the same up to a relevant range of products and will increase as the production level goes beyond the relevant range, known as stepwise cost. Such increases each time as the production level crosses the relevant range.

Scatter Diagram