Using the high-low method and the information below,compute the monthly total fixed costs for Coral Corporation.

Question

Quizplus · Accepted Answer

The high-low method involves using the highest and lowest levels of activity to estimate the fixed and variable components of a cost.

Using the data provided, we can calculate the variable cost per unit:

Variable cost per unit = (highest activity cost - lowest activity cost) / (highest activity level - lowest activity level)
Variable cost per unit = ($23,160 - $16,500) / (3,750 - 2,500)
Variable cost per unit = $6.36

Next, we can use the variable cost per unit to calculate the total fixed cost:

Total fixed cost = highest activity cost - (variable cost per unit x highest activity level)
Total fixed cost = $23,160 - ($6.36 x 3,750)
Total fixed cost = $2,420

Therefore, the monthly total fixed costs for Coral Corporation are $2,420 (Choice B).

Using the High-Low Method and the Information Below,compute the Monthly