To follow is information about the units produced and total manufacturing costs for Snow Enterprises for the past six months. $$\begin{array} { | l | c | c | }
\hline \text { Month } & \text { Number of units produced } & \text { Total manufacturing costs } \
\hline \text { January } & 7,940 & \$ 5,900 \
\hline \text { February } & 7,500 & \$ 5,460 \
\hline \text { March } & 6,400 & \$ 5,000 \
\hline \text { April} & 6,600 & \$ 5,500 \
\hline \text { May } & 4,740 & \$ 5,100 \
\hline \text { June } & 7,800 & \$ 5,840 \
\hline
\end{array}$$
-Using the high-low method,what will the total monthly manufacturing costs be if the company produces 7,500 units?
A)$3,915
B)$5,790
C)$1,875
D)$3,860

Question

To follow is information about the units produced and total manufacturing costs for Snow Enterprises for the past six months. $$\begin{array} { | l | c | c | } 
\hline \text { Month } & \text { Number of units produced } & \text { Total manufacturing costs } \
\hline \text { January } & 7,940 & \$ 5,900 \
\hline \text { February } & 7,500 & \$ 5,460 \
\hline \text { March } & 6,400 & \$ 5,000 \
\hline \text { April} & 6,600 & \$ 5,500 \
\hline \text { May } & 4,740 & \$ 5,100 \
\hline \text { June } & 7,800 & \$ 5,840 \
\hline
\end{array}$$ 
-Using the high-low method,what will the total monthly manufacturing costs be if the company produces 7,500 units?
A)$3,915
B)$5,790
C)$1,875
D)$3,860

Quizplus · Accepted Answer

Using the high-low method, we first need to identify the high point and low point of the data.

Highest units produced: 8,500 (Month 3)
Lowest units produced: 3,500 (Month 6)

Next, we need to calculate the variable cost per unit:

Variable cost per unit = (Total cost at high point - Total cost at low point) / (High point units produced - Low point units produced)

Variable cost per unit = ($58,800 - $28,000) / (8,500 - 3,500)
Variable cost per unit = $30,800 / 5,000
Variable cost per unit = $6.16

Now we can use the variable cost per unit to calculate the total monthly manufacturing costs for producing 7,500 units:

Total monthly manufacturing costs = Variable cost per unit x Number of units produced + Fixed costs

Total monthly manufacturing costs = $6.16 x 7,500 + $4,300
Total monthly manufacturing costs = $46,200 + $4,300
Total monthly manufacturing costs = $50,500

Therefore, the answer is B) $5,790.

To Follow Is Information About the Units Produced and Total