5.00 points The following dala have been extracted fom the reoords of Puzzle, In

Question

5.00 points The following dala have been extracted fom the reoords of Puzzle, Inc August Producton level in units $20,.000 Vanable costs Fored costs Moed oosts 8.000 Tell oosts $77.320 112,840 Required a. Caicuilate the missing costs. (0o not round internmediate calculations. 21.320 77.320 t using the high low method (Do not rournd intermedtiat,calculiations. Roand "Variatle cosr" to 2 decimad places.j b. Caculle the cost fomula fer moxed cost c. Calculate the total cost that would be incurred for the production of 11,556 units (Do not roand initermediate calculationsa d. Identity the two key cend behanior assumpions made in the calculation of your answer to part c O Type here to search

Explanation / Answer

February August

Production level in units 8000 16000

Variable costs 20000 40000

Fixed costs 36000 36000

Mixed costs 21320 36840

Total costs 77320 112840

a) Fixed cost (February) = Total cost - Variable cost - Mixed cost

= 77320 - 20000 - 21320

= 36000

Fixed cost remain constant at any level of production

B) Variable cost per unit = 20000 / 8000 = 2.50

Variable cost (August) = 16000 * 2.50 = 40000

Mixed cost = Total cost - Variable cost - Fixed cost

= 112840 - 40000 - 36000

= 36840

B) Cost formula using high-low method

High low method = (high level of cost - Low level of cost) / (High level of production - Low level of produciton)

= ( 36840 - 21320 ) / (16000 - 8000)

= 15520 / 8000

= 1.94

Fixed cost = 36840 - (1.94 * 16000) = $5800

Cost formula = 5800 + 1.94 Per unit

C) If Production cost is 11556 units

Then total cost = Variable cost + Fixed cost + Mixed cost

= 11556 * 2.5 + 36000 + (5800 + 1.94 *11556)

= 93108.64

d) Cost behavior pattern is linear . Relevant range does not change

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