Question

Mason Company produces short videos used in self-help seminars. Mason C ompany charges $310 for each video it produces. The number of videos produced over the last six months along with the total costs of producing these video sis given below: Videos Produced Month June July August September October November Costs Incurred $18,380 17,230 14,100 16,120 15,000 18,900 Mason Company expects to produce 64 videos during December. Using the high-low method, calculate Mason Company's total expected cos for December

Answer 1

Total cost incurred
	Videos Produced	Costs incurred
High level of activity	75	$18,900
Low level of activity	45	$14,100
Change	30	$4,800
Variable maintainance cost per video produced =$4,800 / 30 =$160 per video produced
Fixed cost element =$18,900 - (75*$160)
Fixed cost element =$18,900 - $12,000 =$6,900
Units selling price	$310
Less:Variable cost	$160
Contribuion margin per unit	$150
Fixed costs	$6,900
Break-even point($6,900/$150)	46	units