Required information George Caloz & Frères, located in Grenchen, Switzerland, ma

Question

Required information George Caloz & Frères, located in Grenchen, Switzerland, makes luxury custom watches in small lots. One of the company's products, a platinum diving watch, goes through an etching process. The company has recorded etching costs as follows over the last six weeks: Week Units Total Etching Cost $ 18 $ 17 $ 25 $ 20 $ 24 $ 16 $120 2 4 30 For planning purposes, management would like to know the variable etching cost per unit and the total fixed etching cost per week. 3. If the company processes five units next week, what would be the expected total etching cost? (Round your intermediate calculations and final answers to 2 decimal places.) Expected total etching cost

Explanation / Answer

From above high cost is in the Week 3 and low cost in the week 6

Variable Cost = Change in Cost / Change in activity

= (25-16) / (8-2)

= $1.50 Per Unit

Fixed Cost = Total Cost - Variable Cost

= 25 - 8 x 1.5

= $13

Cost for 5 Units = 13 + 1.5 x 5

= $20.50

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