the following data have been extracted from the records of Puzzle, inc Alpha Co.

Question

the following data have been extracted from the records of Puzzle, inc Alpha Co. incurred the following costs for the month of September. Variable costs, and the variable portion of mixed co Activity level in units Variable costs Fixed costs Mixed costs Total costs 4,500 $ 9,000 28,000 20,700 $57,700 During October the activity level was 9,400 units, and the total costs incurred were $68,500 Required: a. Calculate the variable costs, fixed costs, and mixed costs incurred during October. Variable cost Fixed cost Mixed cost $ 18,800 28,000 $ 21,700 (Do not round intermediate calculations and round your ansyw b. Use the high-low method to calculate the cost formula for mixed cost 0.20 per unit formu 2 decimal places required

Explanation / Answer

Answer a October Variable cost [9400 units * $2] $18,800.00 Fixed Cost $28,000.00 Mixed cost [$68500 - $18800 - $28000] $21,700.00 Total Cost $68,500.00 Working Variable cost per unit = Variable cost in september / Activity level in units = $9000 / 4500 units = $2 per unit Answer b Calculation of cost formula for Mixed cost Variable cost per unit = [y2 - y1] / [x2 - x1] y2 = total mixed cost at highest level of activity = $21700 y1 = total mixed cost at lowest level of activity = $20700 x2 = the number of units at highest level of activity = 9400 x1 = the number of units at lowest level of activity = 4500 Variable cost per unit = [$21700 - $20700] / [9400 units - 4500 units] = $0.20 per unit Fixed cost = Total cost - Variable cost = $21700 - [9400 units * $0.20] = $19,782 Cost formula would be as under y = $19782 + $0.20x where y = total mixed cost x = no.of units

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