Tashiro Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows: Units Produced Total Costs 60,000 $19,200,000 69,000 20,010,000 90,000 24,090,000 a. Determine the variable cost per unit and the total fixed cost. Variable cost (Round to two decimal places.) $ per unit Total fixed cost $ b. Based on part (a), estimate the total cost for 86,000 units of production. Total cost for 86,000 units $
Tashiro Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows: Units Produced Total Costs 60,000 $19,200,000 69,000 20,010,000 90,000 24,090,000 a. Determine the variable cost per unit and the total fixed cost. Variable cost (Round to two decimal places.) $ per unit Total fixed cost $ b. Based on part (a), estimate the total cost for 86,000 units of production. Total cost for 86,000 units $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
High-Low Method
Tashiro Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:
| Units Produced | Total Costs |
| 60,000 | $19,200,000 |
| 69,000 | 20,010,000 |
| 90,000 | 24,090,000 |
a. Determine the variable cost per unit and the total fixed cost.
| Variable cost (Round to two decimal places.) | $ per unit |
| Total fixed cost | $ |
b. Based on part (a), estimate the total cost for 86,000 units of production.
| Total cost for 86,000 units | $ |
Expert Solution
High low method:
Variable cost per unit = (Highest activity cost - Lowest activity cost) / (Highest activity units - Lowest activity units)
Total fixed cost = Total Highest activity cost - Highest activity units*Variable cost per unit
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