The manufacturing costs of Calico Industries for 3 months of the year are as follows: Total CostProduction (units)April$111,100276,200May82,600163,200June106,300244,600Using the high-low method, the variable cost per unit and the total fixed costs areRound your intermediate calculations to two decimal places.a.$2.50 per unit and $4,205, respectivelyb.$4.50 per unit and $4,205, respectivelyc.$0.25 per unit and $42,050, respectivelyd.$0.45 per unit and $21,025, respectively

Correct answer is c.$0.25 per unit and $42,050, respectively Calculation: For calculating the outcome from high-low method, we require following formula steps. First, we need to calculate the variable cost component and then the fixed cost component, and then plug the results into the cost model formula. Calculate the variable cost component: Variable cost=(HAC-LAC)/(HAU-LAU) HAC-Highest activity cost HAC-Highest activity unit LAC-Lowest activity cost LAC-Lowest activity units Variable cost(VC)=(111,100-82,600)/(276,200-163,200) VC=28500/11300 VC=0.2522 We will use the following formula to determine the fixed cost component: Fixed cost=HAC-(VC*HAU) = 111100-(0.25*276200) = 42050

Answered: The manufacturing costs of Calico…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The manufacturing costs of Calico Industries for 3 months of the year are as follows:

Total Cost Production (units)

April $111,100 276,200

May 82,600 163,200

June 106,300 244,600

Using the high-low method, the variable cost per unit and the total fixed costs are

Round your intermediate calculations to two decimal places.

a.$2.50 per unit and $4,205, respectively

b.$4.50 per unit and $4,205, respectively

c.$0.25 per unit and $42,050, respectively

d.$0.45 per unit and $21,025, respectively

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