High-Low Method to Determine Fixed Cost and Variable RateMcGarvey Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders.MonthJanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecemberRequired:Purchasing Cost$19,25018,05018,20018,05019,34519,50019,67020,94019,43020,02018,80019,340Number of PurchaseOrders370330320410400450460560440600470480W 1. Determine the high point and the low point.Month with high number of purchase ordersMonth with low number of purchase orders2. Calculate the variable rate for purchasing cost based on the number of purchase orders. (Round to the nearest cent.)per purchase order3. Calculate the fixed monthly cost of purchasing.4. Write the cost formula for the purchasing activity showing the fixed cost and the variable rate. Round variable rate to the nearest cent.Total purchasing cost5. If McGarvey Manufacturing Company estimates that next month will have 400 purchase orders, what is the total estimated purchasing cost for that month?6. What if McGarvey Manufacturing wants to estimate purchasing cost for the coming year and expects 6.000What is the total fixed purchasing cost?Why doesn't it equal the fixed cost calculated in Requirement 3 above?hase orders? What will estimated total purchasing cost be?

Mixed-cost problems are solved using the High -Low-cost method. Variable and fixed costs are…

High-Low Method to Determine Fixed Cost and Variable Rate McGarvey Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders. Month January February March }}}} April May June July August September October November December Required: Purchasing Cost $19,250 18,050 18,200 18,050 19,345 19,500 19,670 20,940 19,430 20,020 18,800 19,340 Number of Purchase. Orders 370 330 320 410 400 450 460 560 440 600 470 480 13

High-Low Method to Determine Fixed Cost and Variable Rate McGarvey Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders. Month January February March }}}} April May June July August September October November December Required: Purchasing Cost $19,250 18,050 18,200 18,050 19,345 19,500 19,670 20,940 19,430 20,020 18,800 19,340 Number of Purchase. Orders 370 330 320 410 400 450 460 560 440 600 470 480 13

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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