Question

Blossom Corp. has collected the following data concerning its maintenance costs for the past 6 months.

Units Produced Total Cost
July 18,070 $41,663
August 32,128 48,192
September 36,144 55,220
October 22,088 44,580
November 40,160 74,798
December 38,152 62.248
Compute the variable cost per unit using the high-low method. (Round answer to 2 decimal places, e.g. 2.25.)
Variable cost per unit $ e
Compute the fixed cost elements using the high-low method. Fixed costs $

Answer 1

Variable cost per unit = $1.5 per unit

Fixed cost = $14,558

Step-by-step explanation:

Variable cost per unit

= cost at high activity - cost at low activity/High activity -low activity

=$(74,798- $41,663) / (40,160 -18,070) units

= $1.5 per unit

Fixed cost

Total fixed cost = cost at high activity - ( vc per unit × high activity)

= 74,798 - (1.5 × 40,160)

= $14,558

Variable cost per unit = $1.5 per unit

Fixed cost = $14,558