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Part 1: Zeva Security Products gathered the following monthly warehouse support costs and unit sales data...

Part 1: Zeva Security Products gathered the following monthly warehouse support costs and unit sales data for January through June 2018: Warehouse Support Units Sold Total Cost Unit Cost January 7,510 $166,093 $22.12 February 9,890 $182,158 $18.42 March 5,640 $153,470 $27.21 April 6,890 $161,908 $23.50 May 9,400 $178,850 $19.03 June 4,350 $144,763 $33.28 a) Use the High-Low Method to determine the cost function for warehouse support costs. You must present calculations to support the amounts in your cost functions. (4 points)

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Answer #1

Highest sales unit in february 9890 units

Highest cost in February = $182158

Lowest sales unit in June = 4350 units

Lowest cost $ 144763

Variable cost per unit = (Highest cost - lowest cost ) ÷ ( highest units - lowest unit)

($182158-144763)÷(9890 units-4350 units)

$37395÷ 5540 units= $6.75 per unit

Fixed cost = total cost - variable cost

Fixed cost = $182158-(9890 units *$6.75)

$182158-$66758= $115400

Cost function = Fixed cost + variable cost = total cost

$115400+(9890 units *$6.75)= $182158

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