High–low method A department of Alpha Co. incurred the following costs for themonth of September. Variable costs, and the variable portion of mixed costs, are afunction of the number of units of activity:Activity level in units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000Variable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000Mixed costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000Total costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,000During October the activity level was 8,000 units, and the total costs incurred were$70,500.Required:a. Calculate the variable costs, fixed costs, and mixed costs incurred duringOctober.b. Use the high–low method to calculate the cost formula for mixed cost.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
High–low method A department of Alpha Co. incurred the following costs for the
month of September. Variable costs, and the variable portion of mixed costs, are a
function of the number of units of activity:
Activity level in units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Variable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000
Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Mixed costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Total costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,000
During October the activity level was 8,000 units, and the total costs incurred were
$70,500.
Required:
a. Calculate the variable costs, fixed costs, and mixed costs incurred during
October.
b. Use the high–low method to calculate the cost formula for mixed cost.
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