XYZ Company incurred the following costs for the month of August when it observed an activity level of 10,000 units. Activity level in units 10,000 Variable costs $30,000 Fixed costs 50,000 Mixed costs 40,000 Total costs $120,000 During October, the activity level was 16,000 units, and the total costs incurred were $150,000. a. Calculate the variable costs, fixed costs, and mixed costs incurred during October. b. Use the high-low method to calculate the cost formula for mixed costs. c. If the activity level were expected to be 13,800 units for the month of December, what amount of total costs would be expected?
XYZ Company incurred the following costs for the month of August when it observed an activity level of 10,000 units. Activity level in units 10,000 Variable costs $30,000 Fixed costs 50,000 Mixed costs 40,000 Total costs $120,000 During October, the activity level was 16,000 units, and the total costs incurred were $150,000. a. Calculate the variable costs, fixed costs, and mixed costs incurred during October. b. Use the high-low method to calculate the cost formula for mixed costs. c. If the activity level were expected to be 13,800 units for the month of December, what amount of total costs would be expected?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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XYZ Company incurred the following costs for the month of August when it observed an activity level of 10,000 units.
|
Activity level in units |
10,000 |
|
Variable costs |
$30,000 |
|
Fixed costs |
50,000 |
|
Mixed costs |
40,000 |
|
Total costs |
$120,000 |
During October, the activity level was 16,000 units, and the total costs incurred were $150,000.
a. Calculate the variable costs, fixed costs, and mixed costs incurred during October.
b. Use the high-low method to calculate the cost formula for mixed costs.
c. If the activity level were expected to be 13,800 units for the month of December, what amount of total costs would be expected?
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