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4 July, 10:36

Dollywood Corporation accumulates the following data concerning a mixed cost, using miles as the activity level. Miles Driven Total Cost January 10,000 $16,500 February 8,000 $14,500 March 9,000 $12,500 April 7,000 $12,000 Compute the variable and fixed cost elements using the high-low method. (Round variable cost answer to 2 decimal places, e. g. 52.75.) Variable Cost $ per mile Fixed Cost $

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  1. 4 July, 12:26
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    Instructions are listed below.

    Explanation:

    Giving the following information:

    Miles Driven Total Cost

    January: 10,000 $16,500

    February: 8,000 $14,500

    March: 9,000 $12,500

    April: 7,000 $12,000

    First, we need to calculate the unitary variable cost using the following formula:

    Variable cost per unit = (Highest activity cost - Lowest activity cost) / (Highest activity units - Lowest activity units)

    Variable cost per unit = (16,500 - 12,000) / (10,000 - 7,000) = $1.5 per unit

    Now, we can determine the fixed costs:

    Fixed costs = Highest activity cost - (Variable cost per unit * HAU)

    Fixed costs = 16,500 - (1.5*10,000) = $1,500

    Fixed costs = LAC - (Variable cost per unit * LAU)

    Fixed costs = 12,000 - (1.5*7,000) = $1,500
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