Presented below is the production data for six months of the year showing the mixed costs incurred by Madeline Company.
$\begin{array}{lll}\text { Month }&\text { Cost }&\text { Units }\
\text { July } & \$ 6,000 & 4,000 \
\text { August } & \$ 11,250 & 9,500 \
\text { September } & \$ 11,500 & 9,000 \
\text { October } & \$ 11,700 & 10,500 \
\text { November } & \$ 14,000 & 12,000 \
\text { December } & \$ 12,850 & 10,000
\end{array}$
Madeline Company uses the high-low method to analyze mixed costs.The predicted total cost at an operating level of 10,000 units is ________.
A) $11,725
B) $11,800
C) $12,000
D) $12,850

Question

Quizplus · Accepted Answer

Using the high-low method, the variable cost per unit is calculated as ($14,000 - $6,000) / (12,000 - 4,000) = $1. The fixed cost is then $6,000 - (4,000 * $1) = $2,000. At 10,000 units, the total cost is $2,000 + (10,000 * $1) = $12,000.

Presented Below Is the Production Data for Six Months of the Year