January - production (units) 10,600 , overhead costs $40,250 February - producti

Question

January - production (units) 10,600 , overhead costs $40,250
February - production (units) 10,500, overhead costs $40,000
March - production (units) 11,500, overhead costs $44,250
April - production (units) 12,500, overhead costs $45,500
May - production (units) 11,000, overhead costs $43,750

Use the high/low method to calculate the variable cost per unit and fixed costs.
Variable costs per unit (round to two decimal places)?
Fixed costs?
What are estimated total costs for production of 12,000 units?

Explanation / Answer

We have, x2 = 12500 y2 = $45500 x1 = 10,500 y1 = $40,000 Variable Cost per Unit = ( $45500 - $40000) ÷ ( 12500 - 10500 ) = $2.75 per unit Total Fixed Cost = $45,500 - ( $2.75 × 12500 ) = $11125 fixed cost per unit=$0.89 Cost Volume Formula: y = $11125 + 2.75x for 12000 units,putting in above formula we get cost=44125

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.