Question

Brief Exercise 18-5 a1-a2 Crane Corp. has collected the following data concerning its maintenance costs for the past 6 months. Units Produced Total Cost July 19,960 $46,020 August 35,488 53,232 September 39,924 60,995 October 24,398 48,965 November 44,360 82,620 December 42,142 68,758 (a1) Compute the variable cost per unit using the high-low method. (Round answer to 2 decimal places, e.g. 2.25.) Variable cost per unit

Answer 1

Answer:

A.$1.50 per units

B. $16,080

Explanation:

Computation for the variable cost per unit using the high-low method.

Using this formula

Variable cost per unit= High activity cost -Low Activity cost /High activity cost -Low Activity cost

Let plug in the formula

Variable cost per unit=(82,620-$46,020)/(44,360-19,960)

Variable cost per unit=$36,600/$24,400

Variable cost per unit= $1.5 per units

Therefore the variable cost per unit using the high-low method is $1.50 per units

B. Computation for the fixed cost element unit using the high-low method.

Fixed cost element=82,620-(1.50*44,360)

Fixed cost element=82,620-66,540

Fixed cost element=$16,080

Therefore the fixed cost element unit using the high-low method is $16,080