The manufacturing costs of Mocha Industries for three months of the year are as follows: Total Cost Production April May June $54,546 57,092 61,082 1,670 Units 2,340 3,390 a. Using the high-low method, determine the variable cost per unit. Round your answer to two decimal places. $ per unit b. Using the high-low method, determine the total fixed costs.
The manufacturing costs of Mocha Industries for three months of the year are as follows: Total Cost Production April May June $54,546 57,092 61,082 1,670 Units 2,340 3,390 a. Using the high-low method, determine the variable cost per unit. Round your answer to two decimal places. $ per unit b. Using the high-low method, determine the total fixed costs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![**Manufacturing Costs Analysis of Mocha Industries**
The manufacturing costs for Mocha Industries for three months of the year are as follows:
| Month | Total Cost | Production |
|-------|------------|------------|
| April | $54,546 | 1,670 Units|
| May | $57,092 | 2,340 Units|
| June | $61,082 | 3,390 Units|
**Tasks:**
a. Using the high-low method, determine the variable cost per unit. *Round your answer to two decimal places.*
\[ \text{Variable cost per unit: } \boxed{} \]
b. Using the high-low method, determine the total fixed costs.
\[ \text{Total fixed costs: } \boxed{} \]
**Instructions:**
To calculate the variable cost per unit using the high-low method, identify the months with the highest and lowest production levels, then compute the difference in total costs and production levels between these two months. Use the formula:
\[ \text{Variable Cost per Unit} = \frac{\text{Difference in Total Costs}}{\text{Difference in Production Levels}} \]
For total fixed costs, use the formula:
\[ \text{Total Fixed Costs} = \text{Total Cost} - (\text{Variable Cost per Unit} \times \text{Production}) \]
Apply this calculation to either the high or low month for accuracy.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F95236ad7-6132-43b7-89f4-4633119c5e63%2Ff687461b-9849-43eb-b32f-bc1701c6731c%2F7aiwq9f_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Manufacturing Costs Analysis of Mocha Industries**
The manufacturing costs for Mocha Industries for three months of the year are as follows:
| Month | Total Cost | Production |
|-------|------------|------------|
| April | $54,546 | 1,670 Units|
| May | $57,092 | 2,340 Units|
| June | $61,082 | 3,390 Units|
**Tasks:**
a. Using the high-low method, determine the variable cost per unit. *Round your answer to two decimal places.*
\[ \text{Variable cost per unit: } \boxed{} \]
b. Using the high-low method, determine the total fixed costs.
\[ \text{Total fixed costs: } \boxed{} \]
**Instructions:**
To calculate the variable cost per unit using the high-low method, identify the months with the highest and lowest production levels, then compute the difference in total costs and production levels between these two months. Use the formula:
\[ \text{Variable Cost per Unit} = \frac{\text{Difference in Total Costs}}{\text{Difference in Production Levels}} \]
For total fixed costs, use the formula:
\[ \text{Total Fixed Costs} = \text{Total Cost} - (\text{Variable Cost per Unit} \times \text{Production}) \]
Apply this calculation to either the high or low month for accuracy.
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