Felix & Co. reports the following information about its sales and total costs. P
ID: 2453736 • Letter: F
Question
Felix & Co. reports the following information about its sales and total costs. Period Units Sold Total Costs Period Units Sold Total Costs 1. 0 $ 2,630 6. 2,130 5,630 2. 530 3,230 7. 2,530 6,230 3. 930 3,830 8. 2,930 6,830 4. 1,330 4,430 9. 3,330 7,430 5. 1,730 5,030 10. 3,730 8,598 Hint: (Draw an estimated line of cost behavior using a scatter diagram offline.) Complete the below table to calculate the fixed cost and variable cost of sales by using the high-low method. (Round cost per unit to 2 decimal places.)
Explanation / Answer
Formula to calculate Variable cost under High Low Method:
VC = Total Cost at high level of activity - Total Cost at low level of activity / Units at high level of activity - units at low level of activity
High Level of activity = 10. 3,730 Units at $8,598 Cost
Low Level of activity = 1. 0 Units at $2,630 Cost
VC = 8,598 - 2,630 / 3,730 - 0 = $1.6 Per Unit
Calculation of Fixed Cost = Total Cost at Highest level - Variable cost per unit x Number of Units at high level
Fixed Cost = 8,598 - 1.6 x 3,730 = $2,630
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