The table below shows monthly data collected on production costs and on the number ofunits produced over a twelve month period.Total ProductionCosts$230,000Level of Activity(Units Produced)MonthJuly3.500August250,0003,750260,000SeptemberOctober3,800220,0003,400November340,0005,800DecemberJanuaryFebruaryMarch330,0005,500200,0002,900210,0003,300240,0003,600АprilMayJune380,0005,900350,0005,600290,0005,000a) Determine the variable cost per unit and the fixed cost using the high-lowmethod.b) What is the equation of the total mixed cost function?th and thee) In view of the department's cost behaviour pattern, which of the two methodsappear more appropriate? Explain your answer.

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Description: The table below shows monthly data collected on production costs and on the number ofunits produced over a twelve month period.Total ProductionCosts$230,000Level of Activity(Units Produced)MonthJuly3.500August250,0003,750260,000SeptemberOctober3,800

Variable cost per unit as per high low method = Difference in costs/ Difference in units

Business

Accounting

The table below shows monthly data collected on production costs and on the number of units produced over a twelve month period. Month Total Production Costs $230,000 Level of Activity (Units Produced) July 3.500 August 250,000 3,750 260,000 September October 3,800 220,000 3,400 November 340,000 5,800 December 330,000 5.500 January 200,000 2,900 February |March April Мay 210,000 3.300 240,000 3,600 380,000 5,900 350,000 5,600 June 290,000 5,000 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? th and the e) In view of the department's cost behaviour pattern, which of the two methods appear more appropriate? Explain your answer.

The table below shows monthly data collected on production costs and on the number of units produced over a twelve month period. Month Total Production Costs $230,000 Level of Activity (Units Produced) July 3.500 August 250,000 3,750 260,000 September October 3,800 220,000 3,400 November 340,000 5,800 December 330,000 5.500 January 200,000 2,900 February |March April Мay 210,000 3.300 240,000 3,600 380,000 5,900 350,000 5,600 June 290,000 5,000 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? th and the e) In view of the department's cost behaviour pattern, which of the two methods appear more appropriate? Explain your answer.

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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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

The table below shows monthly data collected on production costs and on the number of
units produced over a twelve month period.
Total Production
Costs
$230,000
Level of Activity
(Units Produced)
Month
July
3.500
August
250,000
3,750
260,000
September
October
3,800
220,000
3,400
November
340,000
5,800
December
January
February
March
330,000
5,500
200,000
2,900
210,000
3,300
240,000
3,600
Аpril
May
June
380,000
5,900
350,000
5,600
290,000
5,000
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?
th and the
e) In view of the department's cost behaviour pattern, which of the two methods
appear more appropriate? Explain your answer.

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