Question

Feeling ignored by Campbell's Chunky soup, Cam Newton teamed up with the Duchess of Cornwall Camilla Parker Bowles to start his own soup company Cam Bowles Soup Company. The company has found success from products such spoon named "The Souperman Spoon" The polishing cost to shine the spoons is a mixed cost The following data was taken New Eatin Cam Chowder soup, Chicken and Dablings soup, and a black hard plastic Total polishing cost Units $144,804 48,000 $168,204 60,000 $204,204 84,000 Using the method in the textbook what portion of the total cost is fixed cost? OA. $51,204 B. $59,400 O C. $65,604 O D. $78,204

Answer 1

Variable cost = (Cost at highest activity - Cost at lowest activity)/(Highest activity-Lowest activity)

= (204204-144804)/(84000-48000)

= 1.65

Fixed cost = Total cost - Variable costs

= 204,204 - (84,000*1.65)

= 65,604

Option C