Question

Bruno Company accumulates the following data concerning a mixed cost, using miles as the activity level.

		Miles Driven		Total Cost				Miles Driven		Total Cost
January		7,995		$14,200		March		8,510		$15,010
February		7,510		13,510		April		8,195		14,495

Compute the variable cost per mile using the high-low method. (Round variable cost per mile to 2 decimal places e.g. 1.25.)

Variable cost per mile

$

Compute the fixed cost elements using the high-low method.

Fixed costs

$

Answer 1

Answer

• High Low method working

	Months	Units	Cost
High Level	Mar	8,510	$                   15,010.00
Low Level	Feb	7,510	$                   13,510.00
Difference		1,000	$                     1,500.00
A	Difference in Cost		$                     1,500.00
B	Difference in units		1,000
C = A/B	Variable cost per unit		$                           1.500
Working		High Level	Low Level
A	Total Cost	$                 15,010.00	$                   13,510.00
B	Total Units	8510	7510
C	Variable cost per unit	$                           1.50	$                             1.50
D = B x C	Total Variable cost	$                 12,765.00	$                   11,265.00
E = A - D	Total Fixed Cost	$                   2,245.00	$                     2,245.00

• Variable cost per mile = $ 1.50
• Fixed Cost = $ 2245