Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows: Units Produced Total Costs 97,500 $27,165,000 112,500 29,715,000 124,500 31,755,000 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet Determine the variable cost per unit and the total fixed cost. Round your answer for variable cost to the nearest cent. Round your answer for total fixed costs to the nearest dollar. Variable cost: $fill in the blank 2 per unit Total fixed cost: $fill in the blank 3 Based on part (a), estimate the total cost for 80,000 units of production. Round your answer to the nearest dollar. Total cost for 80,000 units: $fill in the blank 4
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.
Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:
| Units Produced | Total Costs | |||
| 97,500 | $27,165,000 | |||
| 112,500 | 29,715,000 | |||
| 124,500 | 31,755,000 |
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
-
Determine the variable cost per unit and the total fixed cost. Round your answer for variable cost to the nearest cent. Round your answer for total fixed costs to the nearest dollar.
Variable cost: $fill in the blank 2 per unit Total fixed cost: $fill in the blank 3 -
Based on part (a), estimate the total cost for 80,000 units of production. Round your answer to the nearest dollar.
Total cost for 80,000 units: $fill in the blank 4
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