Relevant Range and High-Low Method The following selected data relate to the major cost categories experienced...

Relevant Range and High-Low Method The following selected data relate to the major cost categories experienced by Shaw Company at varying levels of operating volumes. Assuming that all operating volumes are within the relevant range, calculate the appropriate costs in each column in which blanks appear: Total Cost (@ 3,000 Units) Total Cost (@ 4,000 units) Variable Cost per Unit Total Fixed Cost Total Cost (@ 5,000 units) Direct labor (variable) $57,000 $76,000 $Answer $Answer $Answer Factory supervision (semi-variable) 50,000 65,000 $Answer $Answer $Answer Factory depreciation (fixed) 27,000 27,000 $Answer $Answer $Answer

Expert Solution

All working forms part of the answer
Requirement, as asked

	Total Cost (@ 3,000 Units)	Total Cost (@ 4,000 units)	Variable Cost per Unit	Total Fixed Cost	Total Cost (@ 5,000 units)
Direct labor (variable)	$ 57,000	$ 76,000	$ 19 [(57000/3000) or (76000/4000)]	$ -	$ 95,000 [5000 x $19]
Factory supervision (semi-variable)	$ 50,000	$ 65,000	$ 15 [see working below]	$ 5,000 [see working below]	$ 80,000 [$5000 + (5000 units x $15]
Factory depreciation (fixed)	$ 27,000	$ 27,000	$ -	$ 27,000	$ 27,000

--Working for Factory Supervision

	Units	Cost
High Level	4,000	$ 65,000.00
Low Level	3,000	$ 50,000.00
Difference	1,000	$ 15,000.00

Difference in Cost	$ 15,000.00
Difference in units	1,000
Variable cost per unit	$ 15.00 [15000 / 1000]

Working		High Level	Low Level
A	Total Cost	$ 65,000.00	$ 50,000.00
B	Total Units	4000	3000
C	Variable cost per unit	$ 15.00	$ 15.00
D = B x C	Total Variable cost	$ 60,000.00	$ 45,000.00
E = A - D	Total Fixed Cost	$ 5,000.00	$ 5,000.00

ekkarill92 answered 1 year ago

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Relevant Range and High-Low Method The following selected data relate to the major cost categories experienced...

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