The following data pertains to activity and costs for two months: Assuming that these activity levels are within the relevant range,the mixed costs for July were?
A) $10,000.
B) $15,000.
C) $35,000.
D) $40,000.

Question

The following data pertains to activity and costs for two months:  Assuming that these activity levels are within the relevant range,the mixed costs for July were?
A) $10,000. 
B) $15,000. 
C) $35,000. 
D) $40,000.

Quizplus · Accepted Answer

To calculate the mixed costs for July, we need to use the high-low method. 
The highest activity level is 8,000 machine hours in June, and the corresponding total cost is $43,000. 
The lowest activity level is 4,000 machine hours in May, and the corresponding total cost is $28,000. 
The variable cost per machine hour is (43,000 - 28,000) / (8,000 - 4,000) = $3.75.
The fixed cost component is the total cost minus the variable cost component:
$43,000 - $3.75 * 8,000 = $13,000.
Therefore, the mixed costs for July (assuming a similar activity level as June) would be:
$13,000 + $3.75 * 9,000 = $43,750 / 2 = $21,875.
However, none of the answer choices match this amount, so the closest choice is B) $15,000.

The Following Data Pertains to Activity and Costs for Two