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The following information is available for a company's cost of sales over the last five months.

Month Units sold Cost of sales
January 360 $29,400
February 760 $35,000
March 1,400 $47,000
April 2,200 $59,000
Using the high-low method, the estimated total fixed cost is:

$23,602.
$29,600.
$20,424.
$94,408.
$47,204.

Respuesta :

Answer:

$23,602

Explanation:

For computing the estimated total fixed cost, first we have to determine the variable cost per unit which is shown below:

Variable cost per unit = (High cost of sales - low cost of sales) ÷ (High units sold  - low units sold)

= ($59,000 - $29,400) ÷ (2,200 units  - 360 units)

= $29,600 ÷ 1,840 units

= $16,09

And, the fixed cost equal to

= High cost of sales - (High units sold × Variable cost per unit)

= $59,000 - (2,200 units × $16.09)

= $59,000 - $35,398

= $23,602

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