Use the following information to answer question 17 through 19: Berelsman& Haar,

Question

Use the following information to answer question 17 through 19: Berelsman& Haar, Inc. produces quality hats for fashion-conscious students. During 2017, its highest and lowest production levels occurred in May and November, respectively. In May, it produced 6,000 units at a total cost of S120,000. Using the highlow method of estimating costs, the average variable cost of producing a hat would be: $12.00 $25.71 $34.29 $46.80 None of the above. The correct answer is: 17. In November, it produced 2,000 units at a total cost of $80,000. a. b. c. d. e. 18. Based upon the high-low analysis above, and after determining the expected fixed cost associated with this fact pattern, the cost formula (expressed as Y-A bX) to be used would be (show all work below: Total Cost (Y)- 19. Using your cost formula determined above, what would the total expected cost be if company management plans to produce 4,850 units next month? Show your work and circle your answer Total Cost (Y)-

Explanation / Answer

17) Average variable cost = (120000-80000)/(6000-2000) = $10 per halts

So answer is e) None of the above . the correct answer is $10

18) Fixed cost = Total cost-Variable cost

= 120000-(6000*10)

Fixed cost = $60000

Total Cost (Y) = a+bx

Total cost (Y) = $60000+$10X

19) Total cost (Y) = $60000+(4850*10) = $108500

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