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ces W The following information is available for a company's maintenance cost over the last seven months. Month June July August September October November December Units Produced 110 170 130 160 220 250 70 Change in cost Change in volume 7,750 8,560 3,700 Using the high-low method, estimate both the fixed and variable components of its maintenance cost. Total cost at the high point Variable costs at the high point: Volume at the high point: Variable cost per unit produced Total variable costs at the high point Total fixed costs Total cost at the low point Variable costs at the low point: Saved Maintenance Cost $ 4,780 6,400 5,320 6,130 Volume at the low point: Variable cost per unit produced Total variable costs at the low point High-Low method - Calculation of variable cost per unit produced Cost at high point minus cost at low point Volume at high point minus volume at low point Prey 3 of 20 www www Next

ces W The following information is available for a company's maintenance cost over the last seven months. Month June July August September October November December Units Produced 110 170 130 160 220 250 70 Change in cost Change in volume 7,750 8,560 3,700 Using the high-low method, estimate both the fixed and variable components of its maintenance cost. Total cost at the high point Variable costs at the high point: Volume at the high point: Variable cost per unit produced Total variable costs at the high point Total fixed costs Total cost at the low point Variable costs at the low point: Saved Maintenance Cost $ 4,780 6,400 5,320 6,130 Volume at the low point: Variable cost per unit produced Total variable costs at the low point High-Low method - Calculation of variable cost per unit produced Cost at high point minus cost at low point Volume at high point minus volume at low point Prey 3 of 20 www www Next

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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ces w 2 The following information is available for a company's maintenance cost over the last seven months. * Month June July August September October November December 7,750 8,560 3,700 Using the high-low method, estimate both the fixed and variable components of its maintenance cost. Units Produced 110 170 130 160 220 250 70 Total cost at the high point Variable costs at the high point: Volume at the high point: Variable cost per unit produced Total variable costs at the high point Total fixed costs # Total cost at the low point Variable costs at the low point: Volume at the low point: Variable cost per unit produced Total variable costs at the low point 13 Change in cost Change in volume 3 (4 $ IDI 4 15- % Maintenance Cost $4,780 6,400 5,320 6,130 5 High-Low method - Calculation of variable cost per unit produced Cost at high point minus cost at low point Volume at high point minus volume at low point 16 HA 49 6 Q Search 17 < Prev 4- & Saved 7 + 3 of 20 8 # 144 Next > ▶11
Transcribed Image Text:ces w 2 The following information is available for a company's maintenance cost over the last seven months. * Month June July August September October November December 7,750 8,560 3,700 Using the high-low method, estimate both the fixed and variable components of its maintenance cost. Units Produced 110 170 130 160 220 250 70 Total cost at the high point Variable costs at the high point: Volume at the high point: Variable cost per unit produced Total variable costs at the high point Total fixed costs # Total cost at the low point Variable costs at the low point: Volume at the low point: Variable cost per unit produced Total variable costs at the low point 13 Change in cost Change in volume 3 (4 $ IDI 4 15- % Maintenance Cost $4,780 6,400 5,320 6,130 5 High-Low method - Calculation of variable cost per unit produced Cost at high point minus cost at low point Volume at high point minus volume at low point 16 HA 49 6 Q Search 17 < Prev 4- & Saved 7 + 3 of 20 8 # 144 Next > ▶11
Expert Solution
Step 1

VARIABLE COST 

Variable Cost is a cost that varies with the level of output.

variable costs include costs of goods sold (COGS), raw materials and inputs to production, packaging, wages, etc.

 

FIXED COST 

Fixed costs are costs that Constant at any level of Activity.

fixed costs are rent and lease costs, salaries, utility bills, insurance, loan repayments, Depreciation, Advertisement etc

 

HIGH LOW METHOD

Under High Low Method Variable Cost Per Unit is Computed :— 

= (Total cost at highest level - Total cost at lowest level) ÷ (Highest level - Lowest level)

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