Question

Exercise 18-6 Cost behavior estimation-scatter diagram and high-low LO P1 Felix & Co. reports the following Information about its units produced and total costs. points Units Produced Period Period Total Costs $2,700 3,300 3,980 4.500 608 1.ece 1.489 1.800 Units Produced 2,200 2.680 3.898 3,480 3,888 Total Costs $5.799 6,300 6,988 7.500 9. 160 eBook 5.100 le Hint Estimate total costs of 3.200 units are produced. Complete the below table to calculate the fixed cost and variable cost of sales by using the high-low method. References High-Low method - Calculation of variable cost per unit Change in cost Cost at high point minus cost at low point Change in volume ſ Volume at high point minus volume at low point High-Low method - Calculation of fixed costs Total cost at the high point $ 8.050.00 Variable costs at the high point: Volume at the high point: Variable cost per unit 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 Total variable costs at the low point Total fixed costs Estimated total cost

Answer 1

Solution:

High-Low Method- calculation of Variable cost per unit
Change in cost	(Cost at high Point - Cost at low Point) ($9160 -$2700)		$6,460	Variable cost per unit ($6460/3800)	$1.70
Change in Volume	(Volume at high Point - Volume at Low Point) (3800-0)		3800
High-Low Method- calculation of Fixed cost
Total cost at high point		$9,160
Variable cost at high point:
Volume at high point	3800
Variable cost per maintenance hour	$1.70
Total variable cost at high point		$6,460
Total Fixed costs		$2,700
Total cost at Low point		$2,700
Variable cost at Low point:
Volume at Low point	0
Variable cost per maintenance hour	$1.70
Total variable cost at Low point		$0
Total Fixed costs		$2,700
Estimated Total Cost (3200*$1.70 + $2700)		$8,140