High–low method A department of Alpha Co. incurred the following costs for the month of September. Variable costs, and the variable portion of mixed costs, are a function of the number of units of activity:
|
Activity level in units. |
5,000 |
|
Variable costs |
$10,000 |
|
Fixed costs |
30,000 |
|
Mixed costs. |
20,000 |
|
Total costs. |
$60,000 |
During October the activity level was 8,000 units, and the total costs incurred were $70,500.
Required:
a. Calculate the variable costs, fixed costs, and mixed costs incurred during October.
b. Use the high–low method to calculate the cost formula for mixed cost.