The background info is provided in the image attached. Solve the following:a) Classify each cost element as either fixed, variable, or mixed.b) Calculate:i) the variable production cost per unit and the total fixed production overhead.ii) The total variable cost per unit and the total fixed costsHint: Use the high-low method to separate mixed costs into their fixed and variable components. Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lowerlimits of activity for the year ended December 31, 2020.Lower Limit Upper LimitProduction (# of boxes)Production Costs:Direct MaterialsDirect Labour4,0006,000$60,000$90,00080,000120,000Overhead:Indirect Materials..25,00037,500Indirect LabourDepreciation40,00050,00020,00020,000Selling & Administrative Expenses:Sales Salaries .50,00065,000Office Salaries30,00030,000Advertising45,00045,000Other15.00020.000Total$365.000$477.500

Variable Cost: variable cost is the cost that varies in total cost with change in the unit…

Answered: Classify each cost element as either…

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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The background info is provided in the image attached. Solve the following:

a) Classify each cost element as either fixed, variable, or mixed.

b) Calculate:
i) the variable production cost per unit and the total fixed production overhead.

ii) The total variable cost per unit and the total fixed costs
Hint: Use the high-low method to separate mixed costs into their fixed and variable components.

Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.
The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower
limits of activity for the year ended December 31, 2020.
Lower Limit Upper Limit
Production (# of boxes)
Production Costs:
Direct Materials
Direct Labour
4,000
6,000
$60,000
$90,000
80,000
120,000
Overhead:
Indirect Materials..
25,000
37,500
Indirect Labour
Depreciation
40,000
50,000
20,000
20,000
Selling & Administrative Expenses:
Sales Salaries .
50,000
65,000
Office Salaries
30,000
30,000
Advertising
45,000
45,000
Other
15.000
20.000
Total
$365.000
$477.500

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