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Given the following cost and activity observations for Johnson Company\'s utilit

ID: 2709558 • Letter: G

Question

Given the following cost and activity observations for Johnson Company's utilities, use the high-low method to calculate Johnson's fixed costs per month.

Total Cost

Production

Using the high-low method, determine the variable cost per unit, and the total fixed costs.

Select the correct answer.

A. $38,67 per unit and $88,993 respectively B. $38,23 per unit and $16,015 respectively

C. $38.67 per unit and and $16,015 respectively D.$38,23 per unit and $88,993 respectively

__________________________________________________________________

If fixed costs are $252,631, the unit selling price is $107, and the unit variable costs are $66, what is the break-even sales (units)?

Select the correct answer.

A. 6,162 units B. 66 units C. 2,361 units D. 5,176 units

Total Cost

Production

April $61,276 1,184 May $89,068 1,889 June $105,008 2,328

Explanation / Answer

Variable cost per unit:

= (High level cost-Low level cost)÷Difference in production levels

= ($105,008-$61,276)÷(2,328-1,184)

= 38.23 per unit

Fixed costs:

= $61,276-1,184×38.23

= $16,015

Correct option is B

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