Answer the following questions using the information below:
Presented below are the production data for the first six months of the year for the mixed costs incurred by Benalla Company.
$$\begin{array} { l r r }
\text { Month } & \text { Cost } & \text { Units } \
\text { January } & \$ 4890 & 4100 \
\text { February } & 4024 & 3200 \
\text { March } & 6480 & 5300 \
\text { April } & 8840 & 7500 \
\text { May } & 5800 & 4800 \
\text { June } & 7336 & 6600
\end{array}$$ Benalla Company uses the 'high-low method' to analyse mixed costs.
-What is the estimated total cost at an operating level of 5000 units?
A)$6227.20
B)$6040.00
C)$8510.00
D)$4283.20

Question

Answer the following questions using the information below:
Presented below are the production data for the first six months of the year for the mixed costs incurred by Benalla Company.
 $$\begin{array} { l r r } 
\text { Month } & \text { Cost } & \text { Units } \
\text { January } & \$ 4890 & 4100 \
\text { February } & 4024 & 3200 \
\text { March } & 6480 & 5300 \
\text { April } & 8840 & 7500 \
\text { May } & 5800 & 4800 \
\text { June } & 7336 & 6600
\end{array}$$ Benalla Company uses the 'high-low method' to analyse mixed costs.
-What is the estimated total cost at an operating level of 5000 units?
A)$6227.20
B)$6040.00
C)$8510.00
D)$4283.20

Quizplus · Accepted Answer

The high-low method calculates the variable cost per unit and fixed cost by using the highest and lowest activity levels. Variable cost per unit = (Cost at highest activity - Cost at lowest activity) / (Highest units - Lowest units) = (8840 - 4024) / (7500 - 3200) = 1.40. Fixed cost = Total cost at highest activity - (Variable cost per unit * Highest units) = 8840 - (1.40 * 7500) = 1790. Estimated total cost at 5000 units = (Variable cost per unit * 5000) + Fixed cost = (1.40 * 5000) + 1790 = 6040.00.

Answer the Following Questions Using the Information Below: Presented Below

Answer the Following Questions Using the Information Below:
Presented Below