The following data have been extracted from the records of Riddle Co.: July Dece
ID: 2378513 • Letter: T
Question
The following data have been extracted from the records of Riddle Co.:
July
December
Production level, in units
9,500
15,200
Variable costs
$
23,750
$
?
Fixed costs
?
38,600
Mixed costs
20,855
?
Total costs
$
83,205
$
107,088
Required:
(a)
Calculate the missing costs. (Do not round your intermediate calculations. Omit the "$" sign in your response.)
July
December
Production level, in units
9,500
15,200
Variable costs
$
23,750
$
Fixed costs
38,600
Mixed costs
20,855
Total costs
$
83,205
$
107,088
(b)
Calculate the cost formula for mixed cost using the high-low method. (Do not round your intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Cost formula
=
$
+
$
per unit
The following data have been extracted from the records of Riddle Co.:
Explanation / Answer
a) Fixed cost for July = Fixed cost for December = $38,600
Variable cost for 9500 units in July = 23,750
Variable cost for 15200 units in December =23,750/9500*15200 =38000
Mixed cost in December = Total cost - variable cost - fixed cost =107088-(38000+38600) =$30488
July
December
Production level, in units
9,500
15,200
Variable costs
$
23,750
$
Fixed costs
38,600
Mixed costs
20,855
Total costs
$
83,205
$
107,088
b.
Where,
y2 is the total cost at highest level of activity;
y1 is the total cost at lowest level of activity;
x2 are the number of units/labor hours etc. at highest level of activity; and
x1 are the number of units/labor hours etc. at lowest level of activity
Variable cost per unit =(30488-20855)/(15,200-9500) = 1.69
Fixed cost = 30488- 1.69*15,200 =$4800
Cost formula = $4800 + $1.69* per unit
July
December
Production level, in units
9,500
15,200
Variable costs
$
23,750
$
38,000Fixed costs
38,60038,600
Mixed costs
20,855
30,488Total costs
$
83,205
$
107,088
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