Required information (The following information applies to the questions display

Question

Required information (The following information applies to the questions displayed below. Alden Co's monthly unit sales and total cost data for its operating activities of the past year follow Mana Management wants to use these data to predict future fixed and varlable costs. 162,ee0 262,800 282,800 287,000 187,000 $154,500 98,250 202,600 97,000 198,500 189,800 363,080 267,000 76,600 147,099 $299,984 148,750 68,800 127,625 91,800 84,650 10 97,000 3. Predict future total costs when sales volume is (a) 374000 units and (b) 414.000 units. 374,000 414,000 Total costs

Explanation / Answer

USING HIGH-LOW METHOD: HIGH ACTIVITY 363000 units at a total cost $ 299,984 LOW ACTIVITY 76000 units at a total cost $68000 Variable cost per unit: Change in cost/ Change in units (299,984 - 68,000) / (363000-76000) = 0.814 per unit Taking cost of High activity 299,984 Less: Variable cost 295482 (363,000 units @ 0.814) Fixed cost 4,502 PREDICTIONS 374,000 414000 Variable cost @$0.814 per unit 304436 336996 Fixed cost 4502 4502 Total cost 308938 341498

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