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Homework answers / question archive / To follow is information about the units produced and total manufacturing costs for Pine Enterprises for the past six months

To follow is information about the units produced and total manufacturing costs for Pine Enterprises for the past six months

Accounting

To follow is information about the units produced and total manufacturing costs for Pine Enterprises for the past six months. 
Month Number of units produced Total manufacturing co January 8000 $7000 February 7,500 $8.000 March 6,600 $7.550 April 6,800 $7.650 May 4300 $5000 June 7,000 $7/50 
Using the high-low method, what will the total monthly manufacturing costs be if the comg produces 9500 units? (Round intermediary calculations to the nearest cent.) Al S5130 131 S9450 Cl $7810 D1 $2680 
 

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Answer

C )

Explanation

Computation of Total Manufacturing Cost of 9,500 units using High-Low Method:

 

Units

Manufacturing Cost

January

8,000

7,000

May

4,300

5,000

Difference

3,700

2,000

Variable Cost per unit = Difference in Manufacturing Cost / Difference in Units

= $2,000 / 3,700

Variable Cost = $0.54 per unit

 

At 8,000 Units

Fixed Cost = Total cost - Variable cost

= 7,000 - (8000 * 0.54)

Fixed Cost= $2,675.68

 

Cost of 9,500 Units

Total Cost = $2,675.68 + (9,500 * 0.54)

Cost = $7,810.81 or $7,810

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