(Appendix 5A) 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?
A) $60,000
B) $174,000
C) $150,000
D) $162,000

Question

(Appendix 5A) 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?
A) $60,000 
B) $174,000 
C) $150,000 
D) $162,000

Quizplus · Accepted Answer

11ea7761_1889_fa86_81a5_5710c8b0cf44_TB2580_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

(Appendix 5A) Compton Corporation Is a Wholesale Distributor of Educational