Answer:
Fixed costs= $12,000
Variable cost per unit= $20
Explanation:
Giving the following information:
Machine-hours Labor Costs:
Highest observation of cost driver 1,000 $32,000
Lowest observation of cost driver 200 $16,000
To calculate the fixed 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= (32,000 - 16,000) / (1,000 - 200)
Variable cost per unit= $20
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 32,000 - (20*1,000)
Fixed costs= $12,000
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 16,000 - (20*200)
Fixed costs= $12,000
