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7,920 6,010 3,760 4,820 7.500

7,920 6,010 3,760 4,820 7.500

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Cost Data Analysis Using the High-Low Method **Objective:** To calculate the variable cost per unit and the total fixed cost per month using the high-low method, and to determine the total cost for a specified number of units produced. **Cost Data Collected:** - **April:** - Units: 7,920 - Total Cost: $29,425 - **May:** - Units: 6,010 - Total Cost: $27,101 - **June:** - Units: 3,760 - Total Cost: $17,717 - **July:** - Units: 4,820 - Total Cost: $24,130 - **August:** - Units: 7,500 - Total Cost: $25,980 - **September:** - Units: 8,460 - Total Cost: $26,130 - **October:** - Units: 7,330 - Total Cost: $26,132 - **November:** - Units: 6,940 - Total Cost: $26,212 **Tasks:** a. **Calculate Costs Using the High-Low Method:** - **Variable Cost per Unit** and **Total Fixed Cost per Month**. - *Note:* Do not round intermediate calculations. Round the variable cost to 2 decimal places and the fixed cost to the nearest whole dollar. b. **Total Cost Calculation for 4,850 Units:** - Determine what the total cost would be for a month with 4,850 units produced. - *Note:* Do not round intermediate calculations. Round your final answer to the nearest whole dollar. **Calculation Steps:** 1. **Identify the periods of highest and lowest activity:** - Highest activity: September (8,460 units) - Lowest activity: June (3,760 units) 2. **High-Low Method Formula:** - **Variable Cost per Unit =** (Cost at highest activity - Cost at lowest activity) / (Units at highest activity - Units at lowest activity) - **Fixed Cost =** Total Cost at highest or lowest activity - (Variable Cost per Unit x Units at that activity level) 3. **Use the Calculated Costs:** - Apply the calculated variable and fixed costs to find the
Transcribed Image Text:### Cost Data Analysis Using the High-Low Method **Objective:** To calculate the variable cost per unit and the total fixed cost per month using the high-low method, and to determine the total cost for a specified number of units produced. **Cost Data Collected:** - **April:** - Units: 7,920 - Total Cost: $29,425 - **May:** - Units: 6,010 - Total Cost: $27,101 - **June:** - Units: 3,760 - Total Cost: $17,717 - **July:** - Units: 4,820 - Total Cost: $24,130 - **August:** - Units: 7,500 - Total Cost: $25,980 - **September:** - Units: 8,460 - Total Cost: $26,130 - **October:** - Units: 7,330 - Total Cost: $26,132 - **November:** - Units: 6,940 - Total Cost: $26,212 **Tasks:** a. **Calculate Costs Using the High-Low Method:** - **Variable Cost per Unit** and **Total Fixed Cost per Month**. - *Note:* Do not round intermediate calculations. Round the variable cost to 2 decimal places and the fixed cost to the nearest whole dollar. b. **Total Cost Calculation for 4,850 Units:** - Determine what the total cost would be for a month with 4,850 units produced. - *Note:* Do not round intermediate calculations. Round your final answer to the nearest whole dollar. **Calculation Steps:** 1. **Identify the periods of highest and lowest activity:** - Highest activity: September (8,460 units) - Lowest activity: June (3,760 units) 2. **High-Low Method Formula:** - **Variable Cost per Unit =** (Cost at highest activity - Cost at lowest activity) / (Units at highest activity - Units at lowest activity) - **Fixed Cost =** Total Cost at highest or lowest activity - (Variable Cost per Unit x Units at that activity level) 3. **Use the Calculated Costs:** - Apply the calculated variable and fixed costs to find the
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