Chapter 21, Problem 2PSA

To determine

Concept Introduction:

Cost Volume Profit (CVP) Analysis:

The Cost Volume Profit analysis is the analysis of the relation between cost, volume, and profit of a product. It analyzes the cost and profits at the different level of production, in order to determine the breakeven point and required the level of sales to earn the desired profit.

High-low method involves finding out the variable cost for a company using highest price and lowest price within a range of period for which the data is collected.

The formula that is used here is-

Variable cost per unit = (High Price- Low price)/ (Change in no. of units)

Requirement-1:

To Calculate:

The Variable cost per unit and Total Fixed Costs using the high low method

To determine

Concept Introduction:

Cost Volume Profit (CVP) Analysis:

The Cost Volume Profit analysis is the analysis of the relation between cost, volume, and profit of a product. It analyzes the cost and profits at the different level of production, in order to determine the breakeven point and required the level of sales to earn the desired profit.

High-low method involves finding out the variable cost for a company using highest price and lowest price within a range of period for which the data is collected.

The formula that is used here is-

Variable cost per unit = (High Price- Low price)/ (Change in no. of units)

Requirement-2:

To Calculate:

The total cost at the given level of units