The costs for Fido's Bakery for the year were: Jan Feb Mar Apr May Jun Jul # of Dog Treats Produced Aug Sep Oct Nov Dec 425 510 Factory Utility Costs $ 1659 $ 1,964 $ 2,406 625 725 685 575 510 810 700 650 875 680 Using the High-Low method, predict the cost of producing 900 treats. Enter your answer rounded to the nearest whole number without a dollar sig $2,555 $ 2,637 $2,214 $3,333 $ 3,119 $2,695 $2,503 $3,369 $2,895
1. Using the High-Low method, predict the cost of producing 900 treats. Enter your answer rounded to the nearest whole number without a dollar sign or comma (i.e., 1250)
2. ABC Company leases a copy machine with terms that include a fixed fee each month plus a charge for each copy made. ABC made 9,000 copies and paid a total of $ 473 in January. In April, they paid $ 287 for 5,000 copies. What is the variable cost per copy if ABC uses the high-low method to analyze costs? Enter your answer with two decimals (i.e., .xx)
High Low Method - This method is used to segregate the variable and fixed cost. This method is basically used to calculate the per unit variable cost. Since production level constitutes mixed cost, a portion represents variable cost and other part is fixed cost. We can have a separate cost using the high-low method.
Variable cost per unit = (Highest Activity Cost - Lowest Activity Cost) / Highest Activity Units - Lowest Activity Units)
Variable Cost - Variable cost is the cost which is per unit fixed and varies with the level of production, If the production is high then there is high variable cost and if production is low then low variable cost and similarly if there is no production then no variable cost is required to be incurred.
Fixed Cost - as the name suggest this is fixed cost which means it has no relevance to the level of production, If there is no production then a fixed cost has to be incur. This cost remains same at all levels of activity/production.
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