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Mandarinka [93]
3 years ago
6

To follow is information about the units produced and total manufacturing costs for Pine Enterprises for the past six months. Mo

nth Number of units produced Total manufacturing costs January 9000​ $8200​ February 7,500 $8,000 March 6,600 $7,550 April 6,800 $7,650 May 5000​ $6800​ June 7,000 $7,750Using the high-low method, what is the monthly fixed manufacturing cost
Business
1 answer:
sweet [91]3 years ago
4 0

Answer:

The monthly fixed manufacturing cost is $7500.

Explanation:

Variable cost per unit = change in total cost / change in no of units

                                    = 6900-5000/8000-4200  

                                    = 0.5 per unit

Fixed cost = Total manfacturing cost - variable cost at a 4200 level

                 = 5000 - (4200*0.5)

                 = 5000 - 2100

                 = $2900

If company produces 9200 units:  

Total manfacturing costs = fixed costs + 9200*variable cost per unit

                                          = 2900 + (9200*0.5)  

                                          = $7500

Therefore, The monthly fixed manufacturing cost is $7500.

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