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23 April, 01:41

The manufacturing cost of Calico Industries for three months of the year are provided below:Total Cost Production (units) April $120,000 280,000May 74,000 165,000June 90,900 230,000Using the high-low method, the variable cost per unit and the total fixed costs area. $0.40 per unit and $8,000b. $4.00 per unit and $800c. $0.78 per unit and $4,000d. $7.80 per unit and $4,000

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  1. 23 April, 05:36
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    a. $0.40 per unit and $8,000

    Explanation:

    The computation of the fixed cost and the variable cost per hour by using high low method is shown below:

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

    = ($120,000 - $74,000) : (280,000 - 165,000)

    = $46,000 : 115,000

    = $0.40 per unit

    Now the fixed cost equal to

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

    = $120,000 - (280,000 * $0.40)

    = $120,000 - $112,000

    = $8,000
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