Question

same numbers different question

Question 8: Cardinal Cleaners documented the gallons of cleaning solvent it used as well as total overhead costs for the past five months as follows: Number of gallons Total overhead costs Duly 160 $6,500 August 150 6,100 September 155 6,700 October 175 7,000 November 170 6,800 Using the high/low method, what is the Fixed cost? Select one: O a. $700.00 O b. $650.00 O c. $500.00 O d. $900.00

Answer 1

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Cardinal
High Low method
Variable cost=	(Highest activity cost- Lowest activity cost)/ (Highest activity units- Lowest activity units)
Answer 1	Month	Number of gallons	Overhead costs
Highest activity	October	175.00	7,000.00
Lowest activity	August	150.00	6,100.00
Change		25.00	900.00
Variable cost per gallon		36.00
Fixed cost:	Highest activity cost- (Highest units * Variable cost per unit)
Fixed cost:	7000-(175*36)
Fixed cost	700.00
So answer is option a.
For December	Amount $
Variable cost per gallon	36.00
Total gallons	200.00
Variable cost	7,200.00
Add: Fixed cost	700.00
Total overhead costs	7,900.00
So answer is option a.