Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's records indicate the following: Using the high-low method of analysis, what are the company's estimated total fixed selling and administrative expenses per year? (Round your intermediate calculations to 2 decimal places.)
A) $60,000
B) $174,000
C) $150,000
D) $162,000

Question

Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's records indicate the following:  Using the high-low method of analysis, what are the company's estimated total fixed selling and administrative expenses per year? (Round your intermediate calculations to 2 decimal places.)
A) $60,000 
B) $174,000 
C) $150,000 
D) $162,000

Quizplus · Accepted Answer

11eacbfc_c8ae_3a8b_8ffe_09e1348524de_TB7552_00 Variable cost = Change in cost ÷ Change in activity = $12,000 ÷ 50,000 units = $0.24 per unit
Fixed cost = Total cost − Variable cost
Fixed cost = $222,000 − ($0.24 per unit × 250,000 units) = $162,000

Compton Corporation Is a Wholesale Distributor of Educational CD-ROMs