A department of Alpha Co. incurred the following costs for the month of Septembe

Question

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 5,500

Variable costs $9,700

Fixed costs 31,000

Mixed costs 20,500

Total costs $61,200

During October the activity level was 8,500 units, and the total costs incurred were $71,500.

(a) Calculate the variable costs, fixed costs, and mixed costs incurred during October. (Do not round your intermediate calculations.

Occtober
Variable cost $
Fixed cost $
Mixed cost $

(b) Use the high

Explanation / Answer

As

Total costs =Variable costs +Fixed costs +Mixed costs

total units=8,500
total costs= $71,500.
Variable Costs = (Y2 Y1) ÷ (X2 X1)
= $71,500- $61,200 / 8,500 - 5,500
=3.433$/UNIT
Variable Costs=$28183.333
Fixed cost element = Total cost variable cost element

Y = a + bx

Y = Total cost
a = Total fixed cost
b = Variable cost per unit of activity
x = Number of units of activity

Cost formula = $ + $ per unit=$71,500+8.4117=$79911.7

                               

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