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McNeil uses the high-low method of estimating costs. McNeil had total costs of $51,000 at its lowest level of activity, when

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Answer #1

Correct answer---------$67,800

Working

Cost No. of activities
A High Level $          79,000.00 10500
B Low Level $          51,000.00 5500
C=A-B Difference $          28,000.00                        5,000
A Cost difference $          28,000.00
B No. of activities difference 5000
C=A/B Variable cost per unit $                     5.60
High Level Low Level
A No. of activities 10500 5500
B Variable cost per unit $                5.6000 $                  5.6000
C=AxB Total Variable cost $          58,800.00 $            30,800.00
D Total cost $          79,000.00 $            51,000.00
E=D-C Total fixed cost $          20,200.00 $            20,200.00

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No of units $            8,500.00
Variable cost (5.60 x 8500) $          47,600.00
Fixed cost $          20,200.00
Total cost $          67,800.00
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