Question
In: Accounting
The manufacturing cost of Mocha Industries for three months of the year are provided below: Total...
The manufacturing cost of Mocha Industries for three months of the year are provided below: Total Cost Production April $95,966 1,460 Units May 97,184 2,040 Units June 99,116 2,960 Units (a) Using the high-low method, determine the variable cost per unit. Round your answers to two decimal places. $ per unit (b) Using the high-low method, determine total fixed costs. $
Solutions
Expert Solution
- All working forms part of the answer
- Working
|
Months |
Units |
Cost |
|
|
High Level |
June |
2,960 |
$ 99,116.00 |
|
Low Level |
April |
1,460 |
$ 95,966.00 |
|
Difference |
1,500 |
$ 3,150.00 |
- Requirement ‘a’
|
Difference in Cost |
$ 3,150.00 |
|
Difference in units |
1,500 |
|
Variable cost per unit |
$ 2.10 |
Answer = Variable cost = $ 2.10 per unit
- Requirement ‘b’
|
Working |
High Level |
Low Level |
|
|
A |
Total Cost |
$ 99,116.00 |
$ 95,966.00 |
|
B |
Total Units |
2960 |
1460 |
|
C |
Variable cost per unit |
$ 2.10 |
$ 2.10 |
|
D = B x C |
Total Variable cost |
$ 6,216.00 |
$ 3,066.00 |
|
E = A - D |
Total Fixed Cost |
$ 92,900.00 |
$ 92,900.00 |
Answer: Fixed Cost = $ 92,900
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