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3 years ago

The following information is available for a company’s maintenance cost over the last seven months.

Business

1 answer:

Rainbow [258]3 years ago

3 0

Answer:

Variable cost per unit= $250 per unit

Fixed costs= $2,100

Explanation:

Giving the following information:

June= 9 $5,450

July= 18 $6,900

August= 12 $5,100

September= 15 $6,000

October= 21 $6,900

November= 24 $8,100

December= 6 $3,600

To calculate the fixed and variable costs under the high-low method, we need to use the following formulas:

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

Variable cost per unit= (8,100 - 3,600) / (24 - 6)

Variable cost per unit= $250 per unit

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

Fixed costs= 8,100 - (250*24)

Fixed costs= $2,100

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

Fixed costs= 3,600 - (250*6)

Fixed costs= $2,100

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