Question

5) Saints Publishers has collected the following date for recent months: Month Issues Published Total Cost March 25,000 21,900.00 April 28,100 22,644.00 May 15,770 18,954.00 June 22,100 21,786.00 Determine: A) Using the high-low method, find the variable cost per unit & total fixed costs, B) what is the estimated cost for a month in which 91,000 issues are published? (If required, round answers to the nearest cent).

Answer 1

Correct Answer:

Requirement 1:

Variable cost per unit

$ 0.30

Total fixed cost

$ 14,234.51

Working:

		Cost	No. of activities
A	High Level	$          22,644.00	28100
B	Low Level	$          18,954.00	15770
C=A-B	Difference	$             3,690.00	$            12,330.00
A	Cost difference	$             3,690.00
B	No. of activities difference	12330
C=A/B	Variable cost per unit	$                     0.30
		High Level	Low Level
A	No. of activities	28100	15770
B	Variable cost per unit	$                0.2993	$                  0.2993
C=AxB	Total Variable cost	$             8,409.49	$              4,719.49
D	Total cost	$          22,644.00	$            18,954.00
E=D-C	Total fixed cost	$          14,234.51	$            14,234.51

Requirement 2:

Total cost of 91000 issues

$ 41,468.1

Working:

Total cost of 91000 issues
total no. of issues published	91000
Variable cost per unit	$       0.30
Total variable cost		$ 27,233.58
Fixed cost		$ 14,234.51
Total cost		$ 41,468.09

End of answer.

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