Question

The following information is available for a company's maintenance cost over the last seven months. Maintenance Cost $ 5,550 8,430 Month June July August September October November December Units Produced 100 190 110 140 200 230 50 5,870 6,830 8,750 9,710 3,950 Using the high-low method, estimate both the fixed and variable components of its maintenance cost. High-Low method - Calculation of variable cost per maintenance hour Total cost at the high point Variable costs at the high point: Volume at the high point: Variable cost per unit produced Total variable costs at the high point Total fixed costs Total cost at the low point Variable costs at the low point: Volume at the low point: Variable cost per unit produced Total variable costs at the low point Total fixed costs

Answer 1

Machine Hours 230 High Point Low Point Total Cost 9710$ 3950 $ 50 Variable Cost Per Unit =(cost at Highest Volume- Cost at Lowest volume )/(highest Volume - Lowest Volume) Variable Cost Per Unit =(9710-3950)/(230-50) 32.00 $ 230 9710$ At high Point Total Cost at highest Point Variable cost at the higher Point Volume at the highest Point Variable Cost Pe Unit Total Variable Cost at highest Point Total Fixed Cost 230 32.00 7360$ 2350 $ 50 3950 $ At low Point Total Cost at lowest Point Variable cost at the higher Point Volume at the highest Point Variable Cost Pe Unit Total Variable Cost at highest Point Total Fixed Cost 50 32.00 1600$ 2350 $

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