1) James Company incurred when 20, fixed costs of $270,000. Total costs, both fi
ID: 2594306 • Letter: 1
Question
1) James Company incurred when 20, fixed costs of $270,000. Total costs, both fixed and variable, are $400,000 A) $7.60 s are produced. It sold 70,000 units during the year. Calculate the variable cost per unit. $6.50 C) $6.20 D) $3.10 3002000 2) Mendoza Company's highest point of total cost was $50,000 in June. Their point of lowest cost was 000 In January. The company makes a single product production volume in June and January we 10,000 and 5,000 units, respectively. What is the fixed for the month of June? A) $65,000 B) $20,000 C) $5,000 y provides the following information about its product $45, Targeted operating income elling price per unit 10.0 1.5 80,0Explanation / Answer
Answer:-1)- Total cost (both fixed and variable) =$400000
Units produced = 20000 units
Total fixed cost = $270000
Variable cost = Total cost- Fixed cost
=$400000-$270000
=$130000
Variable cost per unit = Total variable cost/units produced
=$130000/20000 units
=$6.5 per unit
2)- High-Low Method:-
Variable cost per unit (x) is calculated using the following formula:
Variable cost per unit=a2-a1/b2-b1
Where,
a2 is the total cost at highest level of activity;
a1 is the total cost at lowest level of activity;
b2 are the number of units at highest level of activity; and
b1 are the number of units at lowest level of activity
Total Fixed Cost
Total fixed cost (a) is calculated by subtracting total variable cost from total cost, then
Total Fixed Cost = (a2 – x*b2) = (a1 – x*b1)
Where as,
at highest activity: b2 = 10000; a2 = $50000
at lowest activity: b1 = 5000; a1 = $35000
Variable Cost per unit = ($50000 $35000)/(10000 5000)
= $15000/5000 rooms =$3 per unit
Total Fixed Cost = $50000 ($3 × 10000) = $50000 – $30000 =$20000
Variable cost per unit=a2-a1/b2-b1
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