Question
In: Finance
2. For the information below, use the high-low method to determine the mixed cost equation. You...
2. For the information below, use the high-low method to determine the mixed cost equation. You must use both data for the high point, and the low point. You must show the equation (for both the high point and low point - meaning, you must to have TWO equations), not just what the variable cost is. – 4 marks
Units Cost
26 2400
40 3400
28 2600
36 3000
24 2200
Please show your work
Solutions
Expert Solution
| Calculation of cost: | |
| Cost at highest level of activity | 3,400.00 |
| Cost at Lowest level of activity | 2,200.00 |
| Highest level of activity | 40.00 |
| Lowest Level of activity | 24.00 |
| Variable cost per unit = (3400-2200)/(40-24) | |
| Variable cost per unit =1200/16 | |
| Variable cost per unit = $75 | |
| Fixed Costs = 3400-(75*40) | |
| Fixed Costs = $400 | |
| Let the number of units be 'x' | |
| Variable cost equation= 75*x | |
| Fixed cost= Total cost- (75*x)= 400 | |
| Mixed cost equation is Total cost= 400+75*x |
jeff jeffy answered 1 year agoRelated Solutions
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rev: 10_11_2019_QC_CS-185082
Multiple Choice
Y = $6,630 + $2.00H.
Y = $7,125 + $3.00H....
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