Brief Exercise 18-4 Bruno Company accumulates the following data concerning a mi

Question

Brief Exercise 18-4 Bruno Company accumulates the following data concerning a mixed cost, using miles as the activity level. Miles Total Driven Cost Miles Total Driven Cost January 8,005 $14,170 March 8,490 $14,996 February 7,505 13,518 April 8,190 14,495 Compute the variable cost per mile using the high-low method. (Round variable cost per mile to 2 decimal places e.g. 1.25.) Variable cost per mile LINK TO TEXT INTERACTIVE TUTORIAL Compute the fixed cost elements using the high-low method. Fixed costs Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Steps to calculate High–Low method:

1.First calculate the variable cost per unit by using high-low method.

2.The calculation of variable cost per unit is, divided the changes in total cost with highminus low activity level.

3.The variable cost per unit value is calculated.

4.Next calculated the fixed cost by subtracting the total variable cost at either high or lowactivity level from the total cost at the activity level.

a) calculation of variable cost per mile using high - low method

= 14,996 - 13,518 / 8490 - 7505

= 1478 / 985

= 1.5 per mile

b)Calculation of fixed cost element using the high low method

  Activity level

High Low

Total costs 14,996 13,518

Less: Variable cost

(8490 X 1.5) (12735)

(7505 X 1.5) (11258)

Fixed cost 2255 2260

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