Question

In: Accounting

Cypress, which uses the high-low method, had an average cost per unit of $5 at its...

Cypress, which uses the high-low method, had an average cost per unit of $5 at its lowest level of activity when sales equaled 10,000 units and an average cost per unit of $3.25 at its highest level of activity when sales equaled 24,000 units. Cypress would estimate fixed costs as:

Solutions

Expert Solution

Cypress would estimate fixed costs as $ 30,000

Working:

a.
Total Costs at lowest level of sales        10,000 x $       5.00 = $       50,000
Total Costs at highest level of sales        24,000 x $       3.25 = $       78,000
b. As per high-low method,
Variable cost per unit = (Total Costs at highest level of activity-Total Costs at lowest level of activity)/(Highest level of activity-Lowest level of activity)
= (78000-50000)/(24000-10000)
= $ 2.00 per unit
c. Now,
At highest level,
Total Costs $ 78,000
Less:variable costs      24,000 x $         2.00 = $ 48,000
Fixed Costs $ 30,000
At Lowest level,
Total Costs $ 50,000
Less:variable costs      10,000 x $         2.00 = $ 20,000
Fixed Costs $ 30,000
So, Fixed costs would be $ 30,000

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Fremont, which uses the high-low method, reported total costs of $10.40 per unit at its lowest...
Fremont, which uses the high-low method, reported total costs of $10.40 per unit at its lowest production level, 5,000 units. When production tripled to its highest level, the total cost per unit dropped to $6.40. Fremont would estimate its total fixed cost as:     $6.40 $30,000 $52,000 $16.80
Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost.
The manufacturing costs of Ackerman Industries for the first three months of the year follow:ParticularsTotal costUnits producedJanuary$1,900,00020,000 unitsFebruary2,250,00027,000March2,400,00030,000Using the high low method,Determine (a) the variable cost per unit and (b) the total fixed cost
Exercise 4-3 Cost Per Equivalent Unit-Weighted-Average Method [LO4-3] Superior Micro Products uses the weighted-average method in...
Exercise 4-3 Cost Per Equivalent Unit-Weighted-Average Method [LO4-3] Superior Micro Products uses the weighted-average method in its process costing system. Data for the Assembly Department for May appear below: Materials Labor Overhead   Work in process, May 1 $ 40,600   $ 68,409   $ 331,872     Cost added during May $ 246,530   $ 45,606   $ 221,248     Equivalent units of production 3,400   3,300   3,200   Required: 1. Compute the cost per equivalent unit for materials, for labor, and for overhead. (Round your answers to 2...
High-low method Ziegler Inc. has decided to use the high-low method to estimate the total cost...
High-low method Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows: Units Produced Total Costs 104,500 $30,703,250 119,500 33,380,750 136,500 36,415,250 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Determine the variable cost per unit and...
Question One High-Low Method, High—Low Method, Cost Formulas (LO 3) During the past year, the high...
Question One High-Low Method, High—Low Method, Cost Formulas (LO 3) During the past year, the high and low use of three different resources for Wilson Trucking occurred in July and April. The resources are truck depreciation, fuel, and truck maintenance. The number of kilometres travelled is the driver. The total costs of the three resources and the related number of truck kilometres are as follows: Resource                              Truck Kilometres      Total Cost ($) Truck depreciation: High                                                   46,000,000   2,800,000 Low                                                    32,400,000   2,800,000 Fuel:...
Consider a market with 30 sellers and 30 buyers. Of 30 sellers, there are 10 ”high-cost” sellers with production costs of $25 per unit and 20 ”low-cost” sellers with costs of $5 per unit.
Consider a market with 30 sellers and 30 buyers. Of 30 sellers, there are 10 ”high-cost” sellers with production costs of $25 per unit and 20 ”low-cost” sellers with costs of $5 per unit. Of 30 buyers, there are 15 ”high-value” buyers with values of $30 per unit and 15 ”low-value” buyers with values of $10 per unit.a.) Identify the demand schedule for this market.b.) Identify the supply schedule for this market.c.) Graph the demand and supply schedules for this...
High-Low Method, Cost Formulas During the past year, the high and low use of three different...
High-Low Method, Cost Formulas During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows: Resource Airplane Flight Hours Total Cost Airplane depreciation: High 44,000 $ 18,400,000 Low 28,000 $ 18,400,000 Fuel: High...
High-Low Method, Cost Formulas During the past year, the high and low use of three different...
High-Low Method, Cost Formulas During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows: Resource Airplane Flight Hours Total Cost Airplane depreciation: High 44,000 $ 18,000,000 Low 28,000 $ 18,000,000 Fuel: High...
12 - What is target cost per​ unit? A.Target cost per unit is the average total...
12 - What is target cost per​ unit? A.Target cost per unit is the average total unit cost over the​ product's life cycle. B.Target cost per unit is the average total unit cost over the contribution margin ratio. C.Target cost per unit is the contribution margin per unit over the average total unit cost. D.Target cost per unit is the variable unit cost over the​ product's life cycle. 13 - What is value​ engineering? A.Charging different prices to different customers...
Mega CVBA had average total cost per unit of $10.43 at 4,000 units and $8.55 at...
Mega CVBA had average total cost per unit of $10.43 at 4,000 units and $8.55 at 11,000 units. What is the fixed cost for Mega? Please show work and thank you.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT