Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. Alden Company’s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Month Units Sold Total Cost 1 319,000 $ 156,500 2 164,000 100,250 3 264,000 204,600 4 204,000 99,000 5 289,000 200,500 6 189,000 111,000 7 361,000 285,296 8 269,000 150,750 9 76,200 66,000 10 149,000 129,625 11 93,000 93,000 12 99,000 82,650
Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. Alden Company’s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Month Units Sold Total Cost 1 319,000 $ 156,500 2 164,000 100,250 3 264,000 204,600 4 204,000 99,000 5 289,000 200,500 6 189,000 111,000 7 361,000 285,296 8 269,000 150,750 9 76,200 66,000 10 149,000 129,625 11 93,000 93,000 12 99,000 82,650
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method.
Alden Company’s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs.
| Month | Units Sold | Total Cost |
|---|---|---|
| 1 | 319,000 | $ 156,500 |
| 2 | 164,000 | 100,250 |
| 3 | 264,000 | 204,600 |
| 4 | 204,000 | 99,000 |
| 5 | 289,000 | 200,500 |
| 6 | 189,000 | 111,000 |
| 7 | 361,000 | 285,296 |
| 8 | 269,000 | 150,750 |
| 9 | 76,200 | 66,000 |
| 10 | 149,000 | 129,625 |
| 11 | 93,000 | 93,000 |
| 12 | 99,000 | 82,650 |
Transcribed Image Text:Total cost at the highest volume
Variable costs at highest volume:
Highest volume
Variable cost per unit
Total variable costs at highest volume
Total fixed costs
Total cost at the lowest volume
Variable costs at lowest volume:
Lowest volume
Variable cost per unit
Total variable costs at lowest volume
Total fixed costs
High-Low method - Calculation of variable cost per unit
High-Low method - Calculation of fixed costs
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Predict future total costs when sales volume is (a) 378,000 units and (b) 418,000 units.
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