Question

January 400 $ 31,000 February 800 $ 37,000 March 1,600 $ 49,000 April 2,400 $ 61,000 Using the high-low method, the estimated total fixed cost is

Answer 1

$25,000

Step-by-step explanation:

The computation of the estimated total fixed cost is shown below:

But before that the variable cost per unit is

= ($61,000 - $31,000) ÷ (2,400 - 400)

= $30,000 ÷ 2,000

= $15

Now the estimated fixed cost is

= $61,000 - $15 × 2,400

= $61,000 - $36,000

= $25,000