Question

The following data have been extracted from the records of Puzzle, Inc.: February August Production level, in units 8,400 20,160 Variable costs $ 24,360 $ ? Fixed costs ? 30,700 Mixed costs 25,884 ? Total costs $ 80,944 $ 141,626

Total costs $80,944$141,626 Required: a. Calculate the missing costs. (Do not round intermediate calculations.) February August 8,400 S 24,360 Production level, in units Variable costs Fixed costs Mixed costs Total cost:s 20,160 30,700 25,884 S 80,944 $ 141,626 b. Calculate the cost formula for mixed cost using the high-low method. (Do not round intermediate calculations. Round "Variable cost" to 2 decimal places.) Cost formula per unit c. Calculate the total cost that would be incurred for the production of 12,676 units. (Do not round intermediate calculations.) Total cost

Answer 1

Requirement a.

	February	August
Production level in units	8400	20,160
Variable cost	$   24,360.00	$    58,464.00
Fixed cost	$   30,700.00	$    30,700.00
Mixed cost	$   25,884.00	$    52,462.00
Total cost	$   80,944.00	$ 1,41,626.00

Working

	February	August
Production level in units	8400	20160
Variable cost	24360	=2.9*20160
Fixed cost	30700	30700
Mixed cost	25884	=141626-58464-30700
Total cost	80944	141626

Requirement b.

Cost formula = $6899.71 +2.26 per Unit

		Cost	No. of cavities
A	High Level	$      52,462.00	20160
B	Low Level	$      25,884.00	8400
C=A-B	Difference	$      26,578.00	11760
A	Cost difference	$      26,578.00
B	No. of cavities difference	11760
C=A/B	Variable cost per unit	$                2.26
		High Level	Low Level
A	No. of cavities	20160	8400
B	Variable cost per unit	$                2.26	$             2.26
C=AxB	Total Variable cost	$      45,562.29	$ 18,984.29
D	Total cost	$      52,462.00	$ 25,884.00
E=D-C	Total fixed cost	$        6,899.71	$     6,899.71

Requirement c.

Production level in units	12676
Variable cost	$     36,760.40
Fixed cost	$     30,700.00
Mixed cost	$     35,547.90
Total cost	$ 1,03,008.30