To follow is information about the units produced and total manufacturing costs for Pine Enterprises for the past six months.

Using the high-low method,what is the monthly fixed manufacturing cost?
A)$3,900
B)$14,650
C)$1,650
D)$4,250

Question

To follow is information about the units produced and total manufacturing costs for Pine Enterprises for the past six months.

Using the high-low method,what is the monthly fixed manufacturing cost?
A)$3,900 
B)$14,650 
C)$1,650 
D)$4,250

Quizplus · Accepted Answer

D)
Highest cost $8,150 Highest activity 7,800
Lowest cost $6,500 Lowest activity 4,500
Difference $1,650 3,300
NOW divide the difference in the cost by the difference in the activity equals Variable cost per unit.
$1,650/3,300 = $ .50
Put the numbers into the Cost Equation: $8,150 = $.50 (7,800)+ f
$4,250 = f

To Follow Is Information About the Units Produced and Total