Question

7. In applying the high-low method, what is the fixed
cost?

Month | Miles | Total Cost |

January | 70000 | $92000 |

February | 44000 | 80000 |

March | 60000 | 88000 |

April | 84000 | 120000 |

$12000

$36000

$32000

$8000

18. Variable costs for Sunland Company are 60% of sales. Its selling price is $75 per unit. If Sunland sells one unit more than break-even units, how much will profit increase?

$125

$30

$45

$90

Please answer both questions. Thank you!

Answer #1

**7. In applying the high-low method, what is the fixed
cost?**

**Answer: $36000**

High point | 84,000 | 120,000 |

Low point | 44,000 | 80,000 |

Difference | 40,000 | 40,000 |

Divide by: | / 40,000 | |

Variable cost | 1 |

Fixed cost

= Total cost - Variable cost

= 120,000 - (84,000*1)

= 36,000

**18. Variable costs for Sunland Company are 60% of sales.
Its selling price is $75 per unit. If Sunland sells one unit more
than break-even units, how much will profit increase?**

**Answer: $30**

Increase in profit

= Selling price * Contribution margin ratio

= 75 * 40%

= 30

1. Company’s high and low level of activity last year
was 70000 units of product produced in May and 24000 units produced
in November. Machine maintenance costs were $167000 in May and
$65800 in November. Using the high-low method, determine an
estimate of total maintenance cost for a month in which production
is expected to be 54000 units.
2.In applying the high-low method, what is the fixed
cost?
Month
Miles
Total Cost
January
88000
$192000
February
54000
120000
March
80000
168000...

In applying the high-low method, what is the fixed cost?
Month
Miles
Total
Cost
January
76000
$182000
February
66000
160000
March
68000
168000
April
90000
200000

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