Question

The manufacturing cost of Calico Industries for three months of the year are provided below:

Total Cost

Production (units)

April $114,300 284,900
May 87,100 168,100
June 95,300 245,200

Using the high-low method, the variable cost per unit and the total fixed costs are:

a.$0.23 per unit and $48,773

b.$4.14 per unit and $4,877

c.$0.41 per unit and $24,387

d.$2.30 per unit and $4,877

Answer 1

a.$0.23 per unit and $48,773

Step-by-step explanation:

The computation of the variable cost per unit and the total fixed costs variable cost per unit and the total fixed costs using the high-low method is shown below:

Variable cost per unit = (High total cost - low total cost) ÷ (High production units - low production units)

= ($114,300 - $87,100) ÷ (284,900 units - 168,100)

= $27,200 ÷ 116,800 units

= $0.23 per unit

Now the fixed cost equal to

= High total cost - (High production units × Variable cost per unit)

= $114,300 - ( 284,900 units × $0.23)

= $114,300 - $65,527

= $48,773