Question

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

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

 Units Produced Total Cost 20,190 \$44,085 35,904 53,856 40,392 61,710 24,684 47,358 44,880 83,589 42,636 69,564

(a1)

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

(a2)

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

 Fixed costs

(a1)

 Variable cost per unit \$1.6 per unit

Explanation:-

 Variable cost per unit = (Highest activity cost - lowest activity cost) / (Highest activity units - lowest activity units) Variable cost per unit = (November activity cost - July activity cost)/ (November activity units - july activity units) Variable cost per unit = (\$83,589 - \$44,085)/(44,880 - 20,190) Variable cost per unit =\$39,504/ \$24,690 Variable cost per unit = \$1.6

(a2)

 Fixed cost \$11,781

Explanation:-

 Fixed cost = Lowest activity cost - (Variable cost per unit × Lowest activity units) Fixed cost = \$44,085 - (20,190 × \$1.6) Fixed cost = \$44,085 - \$32,304 Fixed cost = \$11,781

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