In cost accounting, the high-low method is a way of attempting to separate out fixed and variable costs given a limited amount of data. The high-low method involves taking the highest level of activity and the lowest level of activity and comparing the total costs at each level. If the variable cost is a fixed charge per unit and fixed costs remain the same, it is possible to determine the fixed and variable costs by solving the system of equations.
1. Calculate variable cost per unit using the identified high and low activity levels
Variable cost = (Total cost of high activity – Total cost of low activity) / (Highest activity unit – Lowest activity unit)
((112,000 X .167) - (168,000 X .132)) / (168,000-112,000) = variable costs
2. Solve for fixed costs
To calculate the total fixed costs, plug either the high or low cost and the variable cost into the total cost formula.
It doesn't appear that you have enough information to answer this section. You need to know total cost to be able to answer this.
Total cost = (Variable cost per unit x units produced) + Total fixed cost
3. Construct total cost equation based on high-low calculations
a. resources can be moved where they're needed-------trade
Trade includes the exchange of products or administrations starting with one individual or substance then onto the next, regularly in return for cash. A system that permits exchange is known as a market.
Trade is a fundamental financial idea including the purchasing and offering of products and ventures, with remuneration paid by a purchaser to a dealer, or the trading of merchandise or administrations between parties.
b. workers have an incentive to improve their skills-------competition
Competition is the basic driver of execution and advancement. It benefits everybody by empowering us to browse a variety of fantastic items at reasonable costs. Competition additionally supports the selection of advancement as organizations develop and new thoughts prosper in the commercial center.
Customers remain to pick up the most from more prominent competition in the data innovation (IT) advertise. Reasonable and open competition implies bring down costs and more noteworthy decision.
c. wasted movements are eliminated-------------specialization
Specialization is a strategy for generation whereby a substance centers around the creation of a restricted extent of products to pick up a more prominent level of proficiency. Numerous nations, for instance, represent considerable authority in delivering the products and ventures that are local to their piece of the world, and they exchange for different merchandise and enterprises. This specialization is, subsequently, the premise of worldwide exchange, as couple of nations have enough generation ability to be totally self-maintaining.
Answer:
A. $1,300 units
Explanation:
Data provided
Fixed expenses = $212,290
Product price = $230.00
Variable cost = $66.70 per unit
The calculation of break-even in monthly unit sales is shown below:-
Unit sales to break even = Fixed expenses ÷ Unit Contribution Margin
= $212,290 ÷ ($230.00 per unit - $66.70 per unit)
= $212,290 ÷ $163.30 per unit
= $1,300 units
Therefore for computing the units sales to break even we simply applied the above formula.
Answer:
For 20,000 units, we have 170,000
For 26,000 units, we have 266,000
Explanation:
Here, we are to calculate the expected level of income from operations.
Formulas that can come in handy from the table are;
Variable amount per unit = sales/number of units
contribution margin = Sales - Variable cost
Income from operations = Contribution margin - fixed cost
Please, kindly checked attached image for tabulated result calculations.
Answer:
Increase
Explanation:
Since the Contribution increased and Fixed Costs have decreased, the resulting effect is an Increase in Net Operating Income. Thus, all other factors remain the same, net operating income will: Increase
