Answer:
The correct answer is D.
Explanation:
Giving the following information:
Units produced - Inspection cost
February: 911 - $16,812
March: 961 - $17,200
April: 917 - $16,865
May: 901 - $16,710
June: 923 - $16,894
July: 908 - $16,780
August: 925 - $16,932
September: 865 - $16,300
October: 904 - $16,738
To calculate the fixed component using the high-low method, first, we need to calculate the unitary variable cost:
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (17,200 - 16,300) / (961 - 865)
Variable cost per unit= $9.375 per unit
Now, we can calculate the fixed costs:
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 17,200 - (9.375*961)
Fixed costs= 8,190.625
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 16,300 - (9.375*865)
Fixed costs= $8,190.625
