Question

X Company uses the high-low method to predict monthly overhead costs. The following were May and September cost and activity results: May September OH Cost $9,005 $12,189 Production 2,700 4,300 If December production is expected to be 4,000 units, what are expected total fixed overhead costs in December [round unit costs to two decimal places]? Submit Answer Tries 0/3

Answer 1

• Requirement asked:
  Total Fixed Overhead cost = $ 3632.00
• Working

	Months	Units	Cost
High Level	Sept	4,300	$                   12,189.00
Low Level	May	2,700	$                    9,005.00
Difference		1,600	$                     3,184.00
A	Difference in Cost		$                     3,184.00
B	Difference in units		1,600
C = A/B	Variable cost per unit		$                           1.990
Working		High Level	Low Level
A	Total Cost	$                 12,189.00	$                     9,005.00
B	Total Units	4300	2700
C	Variable cost per unit	$                           1.99	$                             1.99
D = B x C	Total Variable cost	$                   8,557.00	$                     5,373.00
E = A - D	Total Fixed Cost = Answer	$                   3,632.00	$                     3,632.00