Stewart Company is attempting to classify costs according to their cost behavior.Data concerning activity and costs are listed below:
-If Stewart Company sells 1,150 units in March and this activity is within the relevant range,the expected total cost would most likely be closest to:
A)$2,610.50
B)$1,774.00
C)$4,343.92
D)$4,384.50

Question

Stewart Company is attempting to classify costs according to their cost behavior.Data concerning activity and costs are listed below: 
-If Stewart Company sells 1,150 units in March and this activity is within the relevant range,the expected total cost would most likely be closest to:
A)$2,610.50 
B)$1,774.00 
C)$4,343.92 
D)$4,384.50

Quizplus · Accepted Answer

11eaaee8_679e_88ea_933a_8389deb4c028_TB5186_00 To calculate variable and fixed portions of mixed costs:
Variable component of supplies:
Variable cost = Change in costs F1F1F1S1F1F1F10 Change in units
Variable cost = ($790 - $750) F1F1F1S1F1F1F10 (1,400 - 1,200)
Variable cost = $0.20 per unit
Fixed cost:
High units: $790 - ($0.20 F1F1F1S1F1F1F10 1,400) = $510
Low units: $750 - ($0.20 F1F1F1S1F1F1F10 1,200) = $510
Variable component of lubrication:
Variable cost = Change in costs F1F1F1S1F1F1F10 Change in units
Variable cost = ($576 - $560) F1F1F1S1F1F1F10 (1,400 - 1,200)
Variable cost = $0.08 per unit
Fixed cost:
High units: $576 - ($0.08 F1F1F1S1F1F1F10 1,400) = $464
Low units: $560 - ($0.08 F1F1F1S1F1F1F10 1,200) = $464
Total variable cost per unit (includes maintenance,utilities,advertising,supplies,and lubrication):
$0.50 + $0.74 + $0.75 + $0.20 + $0.08 = $2.27
Total fixed cost:
$800 + $510 + $464 = $1,774
Total cost at 1,150 units = $1,774 + ($2.27 F1F1F1S1F1F1F10 1,150) = $4,384.50

Stewart Company Is Attempting to Classify Costs According to Their