The manufacturing cost of Carrie Industries for the first three months of the ye
ID: 2377942 • Letter: T
Question
The manufacturing cost of Carrie Industries for the first three months of the year are provided below:
Total Cost
Production
January
$ 93,300
2,300 Units
February
115,500
3,100
March
81,900
1,900
Using the high-low method, determine the (a) variable cost per unit, and (b) the total fixed cost.
Total Cost
Production
January
$ 93,300
2,300 Units
February
115,500
3,100
March
81,900
1,900
Explanation / Answer
Variable cost per unit=(y2-y1)/(x2-x1)
at highest activity x2=3100 y2=115500
At lowest activity x1=1900 y1=81900
Variable cost per unit= (115500-81900)/(3100-1900)=28 per unit
Fixed cost=y2-bx2=y1-bx1
Fixed cost=115500-28*3100=81900-28*1900=28700
So, fixed cost=28700
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