7-9. Inventory for Raynor Corp. reveals the following data: Year Cost of purchas

Question

7-9. Inventory for Raynor Corp. reveals the following data:

            Year                            Cost of purchase                 Quantity purchased

            2013                                       $122,675                               2,710 parts

            2014                                       136,000                                2,810

            2015                                       177,653                                4,153

            2016                                       152,825                                3,756

            2017                                       139,125                                2,912

Applying the Hi-Lo method to the above data. Please show your calculations (round to the nearest cent) for:

7. The variable cost per unit.

8. The fixed cost per purchase (round to the nearest dollar).

9. The overall cost for purchasing 3,340 parts in the next year.

Explanation / Answer

parts cost high 4,153 177,653 low 2,710 122,675 diff 1,443 54,978 7) Variable cost per unit = 54,978/1443 38.10 8) fixed cost = 177,653 - 4153*38.10 19424 9) overall cost of purchasing 3,340 pars 19,424   + 3340*38.10 146678

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