Question

Brief Exercise 18-04 Blossom Company accumulates the following data concerning a mixed cost, using miles as the activity level. January February Miles Driven 7,990 7,485 Total Cost $14,100 13,468 March April Miles Driven 8,490 8,190 Total Cost $14,875 14,485 Compute the variable cost per mile using the high-low method. (Round answer to 2 decimal places, e.g. 2.25.) variable cost per miles Variable cost per mile LINK TO TEXT Compute the fixed cost elements using the high-low method. Fixed costs LINK TO TEXT

Answer 1

Answer
	Miles	Total Cost
			January	7990	$     14,100
February	7485	$     13,468
March	8490	$     14,875
April	8190	$     14,485
Computation of the variable and fixed cost elements using the high-low method
			Particulars	Miles	Total Cost
Miles are high in the month of March	8,490	$     14,875
Miles are Low in the month of February	7,485	$     13,468
Computation of Variable cost per Unit
Variable cost per Unit = Difference in total costs/Difference in Miles
Variable cost per Unit = 14,875-13468 /8490-7485
Variable cost per Unit = 1407/1005
Variable cost per Mile =$ 1.40
Computation of Fixed cost
Total Cost = Variable cost + Fixed Cost
Total Cost = 8490*1.40 + Fixed Cost
$ 14,875 = 11,886 + Fixed Cost
Fixed Costs = 14,875-11,886
Fixed Costs =$ 2,989