Question

2. The following information is available for a company's cost of sales over the last five months. Month January February March April May Units sold 400 800 1,600 2,400 2,500 Cost of sales $ 31,000 $ 37,000 $ 49,000 $ 61,000 $ 63,500 Using the high-low method, Estimate total fixed cost of sales (3 points) Estimate variable cost of sales per unit (4 points) If the company projects units sold for next month to be 2,200, how much the total cost of sales will be? (3 points)

Answer 1

Fixed cost comes to $24,800.

variable cost comes to $15.47

total unit cost comes to $58,856 ( since fixed cost remains same irrelevant to the level of production)

the detailed solution is attached

elasSMate Date Foge Zi Fixed Cost Highest Achvil Cast-Vanable Cost Re units Highest Achviy Unik) 63500-($IS48 2500) 24800 2 As por belrs 2nd pard Vaniable Cost Pes uni-(highest AchilCst-owat achviy cest)tigheat adhvity units -Lowat ativi unih) tigh Achvily Cast Lowest Achvi Cest కంం $31,600 High Avckvity unit Lowet Achvlty unis- 2,500 $63,500 Uhit $ 31,000 2,S00400 $1S.48 Total unit FC 2 $24,800 +VC Crst FC (same tor au vel nit) ( 2200 Total unt 22200 x$IS.48 34,056 Ve 24,800 t $34,0s6 S8, 8s6