Question

35) The following data has been assembled for John Company. Use the high-low method.

Month                   Cost               Hours

January             $24,400                2,000

February            $39,000                2,200

March               $35,280                2,750

April                 $36,400                3,500

May                  $40,000                4,000

The expected total cost at an operating level of 1,900 hours is ________.

A) $23,180

B) $23,620

C) $24,000

D) $24,400

Answer 1

Correct answer---(B) $23620

	Months	Units	Cost
High Level	May	4,000	$                   40,000.00
Low Level	January	2,000	$                   24,400.00
Difference		2,000	$                   15,600.00

Difference in Cost	$                                                             15,600.00
Difference in units	2,000
Variable cost per unit	$                                                                       7.80

Working		High Level	Low Level
A	Total Cost	$                 40,000.00	$                   24,400.00
B	Total Units	4000	2000
C	Variable cost per unit	$                           7.80	$                             7.80
D = B x C	Total Variable cost	$                 31,200.00	$                   15,600.00
E = A - D	Total Fixed Cost	$                   8,800.00	$                     8,800.00

Number of Hours	Variable cost per unit	Total Variable cost	Fixed Cost total	Total COST
1900	$ 7.80	$ 14,820.00	$ 8,800.00	$ 23,620.00