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X Company has the following data from 2016 and 2017: 2016    2017    Total costs $207,360 $406,600...

X Company has the following data from 2016 and 2017:

2016    2017   
Total costs $207,360 $406,600
Units produced 26,000 60,000


Expected production in 2018 is 44,600 units. Using the high-low method with the 2016 and 2017 data to determine the parameters of the cost function, what are estimated total costs in 2018?

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Answer #1
2016    2017   
Total costs $207,360 $406,600 High value Change in costs $199,240
Units produced 26,000 60,000 Low value 34,000
Variable manfacturing over head = change in total costs / change In sales units
199240/34000 5.86
Fixed manfacturing overhead = Total cost - Variable oh * Quantity
4066600-(60000*5.86)
55000
Total cost for 2018 44600*5.86+55000 261356 316356
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