Question

Required information Problem 21-2A Cost behavior estimation LO P1 [The following information applies to the questions displayed below.] Alden Co.'s monthly unit sales and total cost data for its operating activities of the past year follow. Management wants to use these data to predict future fixed and variable costs. Month 1 2 3 4 5 6 Units Sold 323,500 168,500 268,500 208,500 293,500 193,500 Total Cost $ 161,000 104,750 209,100 103,500 205,000 115,500 Month 7 8 9 10 11 12 Units Sold 356,500 273,500 75,300 153,500 97,500 103,500 Total Cost $ 252,716 155, 250 61,500 134,125 97,500 78,150 roblem 21-2A Part 1 Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. (Do not round intermediate alculations.)

Answer 1

0.68 High - Low method - Calculation of variable cost per Unit Change in cost Cost at high point minus cost at low point 191216 Variable cost per unit Change in volume Volume at high point minus volume at low point 281200 Total cost at the high point 252716 Variable cost at the high point: Volume at the high point 356500 Units Variable cost per unit 0.681 Total variable costs at the high point 242420 Total fixed costs 10296 61500 Total cost at the low point Variable costs at the low point: Volume at the low point Variable cost per unit Total variable cost at the low point Total fixed costs 75300 Units 0.68 51204 10296 Prediction 383000 423000 Sales (Units) Variable cost Fixed cost 260440 287640 10296 10296 Total cost 270736 297936