Exhibit 5-1
Presented below are the production data for the mixed costs incurred by Clarion Company.
$$\begin{array} { l r r }
\text { Muoth } & \text { Cast } & \text { Units } \
\text { March } & \$ 4,700 & 3,700 \
\text { April } & 7,200 & 5,050 \
\text { May } & 5,565 & 4,725 \
\text { June } & 9,500 & 8,500 \
\text { July } & 7,915 & 6,745 \
\text { August } & 8,300 & 7,500
\end{array}$$ Clarion Company uses the high-low method to estimate mixed costs.
-Refer to Exhibit 5-1.What is the estimated total mixed cost at an operating level of 7,000 units?
A)$10,700
B)$16,500
C)$7,700
D)$8,000
E)None of the answer choices is correct.

Question

Exhibit 5-1
Presented below are the production data for the mixed costs incurred by Clarion Company.
 $$\begin{array} { l r r } 
\text { Muoth } & \text { Cast } & \text { Units } \
\text { March } & \$ 4,700 & 3,700 \
\text { April } & 7,200 & 5,050 \
\text { May } & 5,565 & 4,725 \
\text { June } & 9,500 & 8,500 \
\text { July } & 7,915 & 6,745 \
\text { August } & 8,300 & 7,500
\end{array}$$ Clarion Company uses the high-low method to estimate mixed costs.
-Refer to Exhibit 5-1.What is the estimated total mixed cost at an operating level of 7,000 units?
A)$10,700
B)$16,500
C)$7,700
D)$8,000
E)None of the answer choices is correct.

Quizplus · Accepted Answer

The high-low method uses the highest and lowest activity levels to estimate variable and fixed costs. The variable cost per unit is calculated as (9500 - 4700) / (8500 - 3700) = $1. The fixed cost is then calculated using either the high or low point: $9500 - (8500 * $1) = $1000. The estimated total cost for 7000 units is $1000 + (7000 * $1) = $8000.

Exhibit 5-1 Presented Below Are the Production Data for the Mixed

Exhibit 5-1
Presented Below Are the Production Data for the Mixed