ch 21 Q10 Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost comp0nents of the total cost. The data for various levels of production are as follows:Units ProducedTotal Costs6,820 $505,120 2,420 324,720 4,160 473,010 a. Determine the variable cost per unit and the total fixed cost.Variable cost: (Round to the nearest dollar.)$fill in the blank 1 per unitTotal fixed cost:$fill in the blank 2b. Based on part (a), estimate the total cost for 3,330 units of production.

A high low method is used to separate the mixed cost into fixed cost and variable cost. In this method, the cost is compared as per cost at the highest level of activity and cost at the lowest level of activity.Answer a. Variable cost per unit=Total cost at highest level-Total cost at lowest levelHighest level-Lowest level Variable cost per unit = ( 505,120 - 324,720 ) / ( 6,820 - 2,420 ) = $ 41 Fixed cost = Total cost - ( Unites * Variable cost per unit ) = 505,120 - ( 6,820 * 41 ) = $ 225,500 Answer b. Total cost at 3,300 units Total cost = ( Units * Variable cost per unit ) + Fixed cost = (3,300 * 41 ) + 225,500 = $360,800

Answered: Ziegler Inc. has decided to use the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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ch 21 Q10

Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost comp0nents of the total cost. The data for various levels of production are as follows:

Units Produced	Total Costs
6,820		$505,120
2,420		324,720
4,160		473,010

a. Determine the variable cost per unit and the total fixed cost.

Variable cost: (Round to the nearest dollar.)	$fill in the blank 1 per unit
Total fixed cost:	$fill in the blank 2

b. Based on part (a), estimate the total cost for 3,330 units of production.

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