Question

The following data have been extracted from the records of Puzzle Inc.: Production level, in units Variable costs Fixed costs Mixed costs Total costs February 11,000 $29,700 > 24,100 $90,400 August 25, 300 s > 36,600 $154,750 Required: a. Calculate the missing costs. b. Calculate the cost formula for mixed cost using the high-low method. c. Calculate the total cost that would be incurred for the production of 15,767 units. d. Identify the two key cost behavior assumptions made in the calculation of your answer to parte, Complete this question by entering your answers in the tabs below. Required B Required A Required D Required c Calculate the missing costs. (Do not round intermediate calculations.) February 11,000 $ 29,700 August 25,300 Production level, in units Variable costs Fixed costs Mixed costs 36,600 24 100 Score answer >

Answer 1

a.
February
Fixed Costs = $90400-29700-24100 = $36,600

March
Variable Costs = 29700 / 11000 x 25300 = $68310
Mixed costs = $154750 - 68310 - 36600 = $49840

b.
Variable Cost per unit for mixed cost = ($49840 - 24100) / (25300 - 11000) = $1.80 per unit
Fixed Cost per unit for Mixed Cost = $49840 - 25300 x 1.8 = $4300

Cost Formula = $4300 + $1.80 per unit

c.
Variable Cost per unit = $29700 / 11000 + 1.8 = $4.50 per unit
Fixed Cost = $36600 + 4300 = $40900

Cost for 15767 units = $40900 + 15767 x $4.5 = $111851.50 or $111852
Cost for 20060 units = $40900 + 20060 x 4.5 = $131170

d.
The fixed cost remains constant for units within relevant range and variable cost per unit is same for units produced.

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