Question

Markowis Corp. has collected the following data concerning its maintenance costs for the past 6 months. Units Produced Total Cost July 18,918 $37,836 August 33,632 50,448 September 37,836 57,805 October 23,122 39,938 November 42,040 78,299 December 39,938 65,162

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

Variable cost per unit

$

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

Fixed costs

Answer 1

Variable cost = (Cost at highest activity - Cost at lowest activity) /(Highest activity-Lowest activity)

= (78,299 - 37,836)/(42,040-18,918)

= 1.75

Fixed cost = Total cost - Variable cost

= 37,836 - (18,918*1.75)

=4730

I have rounded some numbers. Comment if you face any issues :) :) :)