Question
In: Accounting
Fremont, which uses the high-low method, reported total costs of $10.40 per unit at its lowest...
Fremont, which uses the high-low method, reported total costs of $10.40 per unit at its lowest production level, 5,000 units. When production tripled to its highest level, the total cost per unit dropped to $6.40. Fremont would estimate its total fixed cost as:
$6.40
$30,000
$52,000
$16.80
Solutions
Expert Solution
Answer-
Total cost on low activity = 5,000*10 .40 = 52,000
Total cost on high activity = 15,000*6.40 = 96,000
Variable cost per unit = (96,000-52,000)/(15,000-5,000) = 4.40per unit
Fixed cost = 96,000-(15,000*4.40) = 30,000
So answer is b) $30,000
ekkarill92 answered 2 years agoRelated Solutions
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rev: 10_11_2019_QC_CS-185082
Multiple Choice
Y = $6,630 + $2.00H.
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