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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