Question 1: Mixed Costs-15 Minutes, 17 Marks Jensen Company accumulates the foll

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Question 1: Mixed Costs-15 Minutes, 17 Marks Jensen Company accumulates the following data concerning a mixed cost, using units produced as the activity level: Month Units Total Cost Produced January February March April May 8,500 6,800 7,000 7,600 9,100 $ 12,500 9,200 9,000 10,900 11,600 Required: Using the high-low method, calculate: 1. The variable shipping cost per unit 2. The fixed shipping cost per month 3. Provide the total cost formula expressed in a linear equation 4. Using your cost formula, estimate the total cost if the company produces 6,000 units.

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1 Unit Total Cost March Lowest unit 7000 9000 May Highet unit 9100 11600 Difference 2100 2600 Varaible Cost per unit 2600/2100            1.24 Per unit 2 Fixed Cost Variable Cost for 7000*1.24=8,680 Fixed Cost=9000-8680=320 3 Total Cost Formula Total Cost =1.24x+320 where x=no of units produced 4 Total cost if company produced 6000 units 1.24*6000+320          7,760

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