If total costs are $50,000 when production levels are highest at 1,000 units and total costs are...
If total costs are $50,000 when production levels are highest at 1,000 units and total costs are $35,000 when production levels are lowest at 500 units, using the high-low method, how much are fixed costs?
a. $30
b. $20,000
c. $15,000
d. $85,000
Homework Answers
Variable cost per unit=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)
=(50,000-35,000)/(1000-500)
=$30 per unit
Hence total fixed costs=50,000-(1000*30)
=$20,000
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