Sapphire Company has decided to use the High-Low Method to estimate the total cost and separate the fixed and variable components of cost. The company collected the following data for various levels of production: Units Produced Total Costs 8,000 10,000 $315,000 $365,000 $465,000 14,000 Based on the High-Low Method analysis: ⚫ Variable cost per unit = $25 ⚫ Total fixed cost = $115,000 Estimate the total cost if Sapphire Company produces 12,000 units.

Sapphire Company has decided to use the High-Low Method to estimate the total cost and separate the fixed and variable components of cost. The company collected the following data for various levels of production: Units Produced Total Costs 8,000 10,000 $315,000 $365,000 $465,000 14,000 Based on the High-Low Method analysis: ⚫ Variable cost per unit = $25 ⚫ Total fixed cost = $115,000 Estimate the total cost if Sapphire Company produces 12,000 units.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 5EB: Baxter Company has a relevant range of production between 15,000 and 30,000 units. The following...

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a) Determine the variable cost per unit and the fixed cost using the high-low method.b) What is the equation of the total mixed cost function?c) Prepare the scatter diagram and insert the trendline or line of best-fit. Use a scaleof 2 cm to represent 1,000 units on the x-axis & 2 cm to represent $50,000 on the yaxis.
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