Question

Obj 1 High-low method The manufacturing costs of Rosenthal Industries for the first three months of the year follow BE 20-1 Units Produced Total Costs 22,500 units 35,000 55,000 $1,890,000 2,800,000 January February March 4,230,000 Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed coe

Answer 1

Calculation of variable cost per unit:

Variable cost per unit= (cost at highest unit-cost at lowest units)/(highest units-lowest units)

Variable cost per unit= (4230000-1890000)/(55000-22500)= 72

Variable cost per unit= $72

Calculation of fixed cost:

Fixed cost= 4230000-(55000*72)= 270000

Fixed cost= $270000