Question

Leslie Sporting Goods is a locally owned store that specializes in printing team jerseys. The majority of its busine orders for various local teams and organizations. While Leslie's prints everything from bowling team jerseys to fra apparel to special event shirts, summer league baseball and softball team jerseys are the company's biggest sou A portion of Leslie's operating information for the company's last year follows: Number of Jerseys Printed 215 195 230 550 675 Month January February March April May June July August September October November December Operating Cost $5,835 5,685 5,930 8,575 9,770 9,260 6,230 6,175 6,005 5,960 4,960 4,800 655 455 375 310 230 185 175 Required: 3. Using the high-low method, calculate the store's total fixed operating costs and variable operating cost per - - -

Answer 1

Variable cost per hour = (Highest activity cost - Lowest activity cost)/(Highest activity - Lowest activity)

= (9,770 - 4,800)/(675 - 175)

= 4,970/500

= $9.94 per jersey printed

Fixed cost = Highest activity cost - (Highest activity x Variable cost per jersey printed)

= 9,770 - (675 x 9.94)

= 9,770 - 6,709.5

= $3,060.5

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