Question

Inspection costs at a Straiton Corporation factory are listed below Units Produced 119 117 113 125 April May June July August September October November Inspection Costs $ 8,558 $ 8,535 $ 8.280 $ 8.736 $ 9.357 $ 8,320 $ 8,603 $10,337 152 108 120 192 Management believes that inspection cost is a mixed cost that depends on units produced to some extent. Use the high-low method to estimate the variable and fed components of this cost. Round the variable component to the nearest whole cent. Round the fixed.component to the nearest whole dollar. These estimates would be $2408 per unit plus 55,709 per month 567.74 per unit plus 8.58 per month $24.37 per unit plus 55.658 per month $2401 per unit plus 55.727

Answer 1

Highest activity cost = $10,337

Lowest activity cost = $8,320

Highest activity = 192

Lowest activity = 108

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

= (10,337-8,320)/(192-108)

= 2,017/84

= $24.01 per unit

Fixed cost = Highest activity cost - Highest activity x Variable cost per unit

= 10,337- 192 x 24.01

= 10,337-4,610

= $5,727

Fourth option is correct.

$24.01 per unit plus $5,727 per month

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