Answer:
Instructions are below.
Explanation:
Giving the following information:
Month - Units shipped - Total Shipping Expense
January: 3 - $1,300
February: 6 - $1,600
March: 4 - $1,400
April: 5 - $1,500
May: 7 - $1,700
June: 8 - $1,800
July: 2 - $1,200
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= (1,800 - 1,200) / (8 - 2)
Variable cost per unit= 100
Now, we can calculate the fixed costs:
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 1,800 - (100*8)
Fixed costs= 1,000
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 1,200 - (100*2)
Fixed costs= $1,000
Finally, the total cost formula:
Total cost= 1,000 + 100X
X= units shipped
