Chapter 12, Problem 12.17P

Problem 12.17

LO 6

High-low method A department of Alpha Co. incurred the following costs for the month of September. Variable costs, and the variable portion of mixed costs, are a function of the number of units of activity:

Activity level in units	5,000
Variable costs	$10,000
Fixed costs	30,000
Mixed costs	20.000
Total costs	$60,000

During October the activity level was 8,000 units, and the total costs incurred were $70,500.

Required:

1. Calculate the variable costs, fixed costs, and mixed costs incurred during October.
2. Use the high-low method to calculate the cost formula for mixed cost.