Question

MC Qu. 109 The following information is... The following information is available for a company's cost of sales over the last five months. MonthUnits sold Cost of sales January490 $34,600 February890 $41,500 March2,050 $53,500 April2,850 $65,500 Using the high-low method, the estimated variable cost of sales per unit sold is:

Answer 1

Variable cost per unit= $13.093

Step-by-step explanation:

Giving the following information:

Month Units sold Cost of sales

January 490 $34,600

February 890 $41,500

March 2,050 $53,500

April 2,850 $65,500

To calculate the variable and fixed cost under the high-low method, we need to use the following formulas:

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (65,500 - 34,600) / (2,850 - 490)

Variable cost per unit= $13.093

To prove:

Fixed costs= Highest activity cost - (Variable cost per unit * HAU)

Fixed costs= 65,500 - (13.093*2,850)

Fixed costs= $28,185

Fixed costs= LAC - (Variable cost per unit* LAU)

Fixed costs= 34,600 - (13.093*490)

Fixed costs= $28,185