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Concept introduction:
Mixed Costs:
There are three types of costs according to the unit of production; Variable, Fixed and Mixed. Variable costs change proportionally with the number of units produced and variable cost per unit remains constant. Fixed Cost remains same in totality irrespective of the number of units produced.
The mixed cost is the mix of variable and fixed cost, some of its part is fixed and some variable.
High-Low Method:
This method is used to determine the fixed as well as variable part of the mixed cost. The formula for calculation of variable cost per unit is as follows:
The formula to calculate the Fixed Cost is as follows:
Requirement 1:
To indicate:
The scattered diagram.
Concept introduction:
Mixed Costs:
There are three types of costs according to the unit of production; Variable, Fixed and Mixed. Variable costs change proportionally with the number of units produced and variable cost per unit remains constant. Fixed Cost remains same in totality irrespective of the number of units produced.
The mixed cost is the mix of variable and fixed cost, some of its part is fixed and some variable.
High-Low Method:
This method is used to determine the fixed as well as variable part of the mixed cost. The formula for calculation of variable cost per unit is as follows:
The formula to calculate the Fixed Cost is as follows:
Requirement 2:
To calculate:
The Fixed and variable cost using the high low method.
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Chapter 5 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
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