Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / Some Mixed Cost and Activity level data : Month Activity Volume (patient-days) Maintenance Cost Incurred January 9,000 $6,900 February 7,100 8,500 March 5,000 7,450 April 6,500 8,200 May 7,300 9,070 June 8,000 9,800 July 6,200 7,800 August 7,200 8,600 September 6,100 8,000 October 9,500 7,950 Using the High-Low method, compute: • the variable cost per unit; • the fixed cost; and then • express the costs in equation form Y = a + bX
Some Mixed Cost and Activity level data :
Month Activity Volume (patient-days) Maintenance Cost Incurred January 9,000 $6,900 February 7,100 8,500 March 5,000 7,450 April 6,500 8,200 May 7,300 9,070 June 8,000 9,800 July 6,200 7,800 August 7,200 8,600 September 6,100 8,000 October 9,500 7,950
Using the High-Low method, compute: • the variable cost per unit; • the fixed cost; and then • express the costs in equation form Y = a + bX.
Computation of Variable Cost per Unit using High-low Method:
Variable Cost per Unit = (Highest Activity Cost Level - Lower Activity Cost Level)/(Highest Activity Level - Lower Activity Level)
= ($7,950-$7,450)/(9,500-5,000)
= $500/4,500
Variable Cost per Unit = $0.1111
Computation of Fixed Cost using High-low Method:
Fixed Cost = Highest Activity Cost Level - (Highest Activity Level*Variable Cost per Unit)
= $7,950 - (9,500*$0.1111)
= $7,950 - $1,055.56
Fixed Cost = $6,894.44
Cost Equation:
Y = a+bx
Total Cost = Fixed Cost + (Variable Cost*Activity Level)
Y = $6,894.44 + ($0.1111*X)
