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X Company's accountant uses the high-low method to determine the parameters of the company's monthly overhead...

X Company's accountant uses the high-low method to determine the parameters of the company's monthly overhead cost function, with units produced as the independent variable. She has the following past monthly observations to work with:

Units Produced Cost  
7,400 $35,106  
9,100 38,575
8,400 37,275
7,100 32,993
6,500 31,893
7,900 36,525

X Company estimates that 10,000 units will be produced in July. What are estimated fixed overhead costs for July?

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Answer #1
Units Produced Cost  
7,400 $35,106
9,100 38,575
8,400 37,275
7,100 32,993
6,500 31,893
7,900 36,525
High 9,100 38,575
Low 6,500 31,893
Delta 2,600 6,682
Variable cost per unit = $          2.57
6682/2600
Fixed cost = 38575-9100*2.57=
$ 15,188.00
Ans = $ 15,188.00
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