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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.
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
Expert Solution
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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