Question

In: Accounting

the following information pertains to manufacturing costs and direct labor hour. Given the information, what is...

the following information pertains to manufacturing costs and direct labor hour. Given the information, what is fixed cost of the cost function? month total costs direct LH Jan 4000 360 Feb 4,025 326 Mar 4100 375 April 4500 400 May 4400 405 June 4,380 446 July 4450 425

Solutions

Expert Solution

  • All working forms part of the answer
  • Requirement = Fixed Cost
  • How to calculate? = Use High Low Method

Months

Direct labor hours

Cost

High Level

June

                     446

$      4,380.00

Low Level

January

                     360

$      4,000.00

Difference

                       86

$          380.00

Difference in Cost

$                                         380.00

Difference in units

                                                     86

Variable cost per unit

$                                              4.42

Working

High Level

Low Level

A

Total Cost

$        4,380.00

$      4,000.00

B

Total Units

446

360

C

Variable cost per unit

$                4.42

$               4.42

D = B x C

Total Variable cost

$        1,970.70

$      1,590.70

E = A - D

Total Fixed Cost

$        2,409.30

$      2,409.30

  • Answer = Fixed Cost = $ 2,409
  • Note: Intermediate calculations are not rounded off.

ekkarill92 answered 2 years ago
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