Question

The below information is provided by Mango International concerning its units produced and total costs. Period Units Produced Period NM 480 880 1,280 1,680 Total Costs $2,580 3,180 3,780 4,380 4,980 Units Produced 2,080 2,480 2,880 3,280 3,680 Total Costs $5,580 6,180 6,780 7,380 8,836 Estimate total costs if 3,080 units are produced. Complete the below table to calculate the fixed cost and variable cost of sales by using the high-low method. High-Low method - Calculation of variable cost per unit High-Low method - Calculation of fixed costs Total cost at the high point Variable costs at the high point: Volume at the high point: Variable cost per unit Total variable costs at the high point Total fixed costs Total cost at the low point Variable costs at the low point: Volume at the low point: Variable cost per unit Total variable costs at the low point Total fixed costs Estimated total cost

Answer 1

Answer

• High Low Method, computation of Variable cost per unit

Change in Cost	Cost at high point minus at low point		$       6,256.00	$                  1.70
Change In Volume	Volume at high point minus volume at low point		3,680

--Working

	Months	Units	Cost
High Level	10	3,680	$                     8,836.00
Low Level	1	-	$                     2,580.00
Difference		3,680	$                     6,256.00

• Calculation of Fixed Cost

Total Cost at the high Point		$                   8,836.00
Variable cost at the high Point:
Volume at the high point	3680
Variable cost per hour/unit	$               1.70
Total Variable cost at the high point		$                   6,256.00
Total Fixed Costs		$                   2,580.00
Total cost at the low point		$                   2,580.00
Variable cost at the Low Point:
Volume at Low Point	0
Variable cost per hour/unit	$               1.70
Total Variable cost at the low point		$                                -
Total Fixed Costs		$                   2,580.00