PROBLEM SET B Problem 21-1B Cost estimation using high-low method Pl Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Month Units Sold 195,000 1.... 2.... 125,000 3 105,000 155,000 95,000 215,000 45 **** Total Cost $ 97,000 87,000 73,000 89,000 81,000 110,000 Month 7... *** 10 11... 12 *** Units Sold 145,000 185,000 135,000 85,000 175,000 115,000 Total Cost $ 93,000 105,000 85,000 58,000 95,000 79,000
PROBLEM SET B Problem 21-1B Cost estimation using high-low method Pl Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Month Units Sold 195,000 1.... 2.... 125,000 3 105,000 155,000 95,000 215,000 45 **** Total Cost $ 97,000 87,000 73,000 89,000 81,000 110,000 Month 7... *** 10 11... 12 *** Units Sold 145,000 185,000 135,000 85,000 175,000 115,000 Total Cost $ 93,000 105,000 85,000 58,000 95,000 79,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Step 1 Introduction
The question is based on the concept of Cost Accounting.
Variable costs are the costs that remains same on per unit basis but changes with the level of output where as fixed cost remains same in totality but changes on per unit basis.
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