Byrnes Company accumulates the following data concerning a mixed cost, using units produced as the activity level.
|
Units Produced |
Total Cost |
|
|
March |
9,800 |
$14,740 |
|
April |
8,500 |
13,250 |
|
May |
7,000 |
11,100 |
|
June |
7,600 |
12,000 |
|
July |
8,100 |
12,460 |
(a)Compute the variable- and fixed-cost elements using the high-low method.
(b)Estimate the total cost if the company produces 6,000 units.
Determine the highest and lowest levels of activity.
Compute variable cost per unit as: Change in total costs ÷ (High – low activity level) = Variable cost per unit.
Compute fixed cost as: Total cost – (Variable cost per unit × Units produced) = Fixed cost.