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5 September, 05:52

The manufacturing cost of Calico Industries for three months of the year are provided below:

Total Cost

Production (units)

April $114,300 284,900

May 87,100 168,100

June 95,300 245,200

Using the high-low method, the variable cost per unit and the total fixed costs are:

a.$0.23 per unit and $48,773

b.$4.14 per unit and $4,877

c.$0.41 per unit and $24,387

d.$2.30 per unit and $4,877

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  1. 5 September, 06:42
    0
    a.$0.23 per unit and $48,773

    Explanation:

    The computation of the variable cost per unit and the total fixed costs variable cost per unit and the total fixed costs using the high-low method is shown below:

    Variable cost per unit = (High total cost - low total cost) : (High production units - low production units)

    = ($114,300 - $87,100) : (284,900 units - 168,100)

    = $27,200 : 116,800 units

    = $0.23 per unit

    Now the fixed cost equal to

    = High total cost - (High production units * Variable cost per unit)

    = $114,300 - (284,900 units * $0.23)

    = $114,300 - $65,527

    = $48,773
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