Respuesta :
Answer:
a. $175.50 and $11,060,000
b. $31,242,500
Explanation:
The computation of the fixed cost and the variable cost per unit by using high low method is shown below:
Variable cost per units = (High total cost - low total cost) ÷ (High units produced - low units produced)
= ($32,120,000- $25,100,000) ÷ (120,000 units - 80,000 units)
= $7,020,000 ÷ 40,000 units
= $175.50
Now the fixed cost equal to
= High total cost - (High units produced × Variable cost per unit)
= $32,120,000 - (120,000 units × $175.50)
= $32,120,000 - $21,060,000
= $11,060,000
Now the estimated total cost is would be
= Fixed cost + expected units of production × variable cost per unit
= $11,060,000 + 115,000 units × $175.50
= $11,060,000 + $20,182,500
= $31,242,500
Answer:
The correct answer for option (a) is $175.5/unit and $11,060,000 and for option (b) is $31,242,500.
Explanation:
According to the scenario, the computation of following given data are as follows:
(a). Variable cost can be calculated by using following formula:
Variable cost = [Total cost at highest level -Total cost at lowest level] ÷ (Highest level units - Lowest level units)
By putting the value we get,
Variable cost = ( $32,120000 - $25,100,000) ÷ (120,000 - 80,000)
=$175.5/unit
Fixed cost can be calculate by using following formula:
Fixed cost = Total cost at highest level - ( Variable cost × Highest level units )
By putting the value we get,
Fixed cost = $32,120,000 - ($175.5 × 120,000)
= $11,060,000
(b). Total cost can be calculated by using following formula:
Total cost = Fixed cost + ( Variable cost × Units of production )
By putting the value we get,
Total cost = $11,060,000 + ($175.5 × 115,000)
= $31,242,500.