Question

# Ivanhoe Corp. has collected the following data concerning its maintenance costs for the past 6 months....

Ivanhoe Corp. has collected the following data concerning its maintenance costs for the past 6 months.

 Units Produced Total Cost 18,700 \$39,712 33,344 50,016 37,512 57,310 22,924 40,126 41,680 77,629 39,596 64,604

Part 1

Compute the variable cost per unit using the high-low method. (Round answer to 2 decimal places, e.g. 2.25.)

 Variable cost per unit \$enter the variable cost per unit in dollars rounded to 2 decimal places

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Part 2

Compute the fixed cost elements using the high-low method.

 Fixed costs \$enter the fixed costs in dollars

Part 1

Highest activity cost = \$77,629

Lowest activity cost = \$39,712

Highest activity = 41,680

Lowest activity = 18,700

Variable cost per unit = (Highest activity cost - Lowest activity cost)/(Highest activity - Lowest activity)

= (77,629-39,712)/(41,680-18,700)

= 37,917/22,980

= \$1.65 per unit

 Variable cost per unit \$1.65

Part 2

Fixed cost = Highest activity cost - Highest activity x Variable cost per unit

= 77,629- 41,680 x 1.65

= 77,629-68,772

= \$8,857

 Fixed costs \$8,857

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