Hint(s) Check My Work (No more tries available) eBook Animated Example Exercise

Question

Hint(s) Check My Work (No more tries available) eBook Animated Example Exercise High-Low Method The manufacturing costs of Fuld Industries for three months of the year are provided below. Total Costs Production January $184,800 3,520 units February 139,660 2,370 March 118,800 1,320 Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost. Round all answers to the nearest whole dollar. a. Variable cost per unit $ b. Total fixed cost $ Hide Feedback Incorrect Check My Work Feedback a. Divide the difference between the highest and lowest total costs by the difference between the highest and lowest production units. b. Multiply the variable unit cost by the number of units for a month. Subtract this variable cost from the month's total cost to arrive at the total fixed cost. The resulting amount should be the same for either the highest or lowest production month. Learning Objective 1.

Explanation / Answer

a Variable cost per unit =(184800-118800)/(3520-1320)= 30 b Total fixed cost =184800-(3520*30)= 79200

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