Inspection costs at one of Ratulowski Corporation's factories are listed below: Management believes that inspection cost is a mixed cost that depends on units produced.
Using the high-low method, the estimate of the fixed component of inspection cost per month is closest to: (Round your intermediate calculations to 2 decimal places.)

Question

Inspection costs at one of Ratulowski Corporation's factories are listed below:  Management believes that inspection cost is a mixed cost that depends on units produced.
Using the high-low method, the estimate of the fixed component of inspection cost per month is closest to: (Round your intermediate calculations to 2 decimal places.)

Quizplus · Accepted Answer

11eacbfc_c8ad_ec67_8ffe_4f425a498c5c_TB7552_00 Variable cost per unit = Change in cost ÷ Change in activity
= $619 ÷ 76 units
= $8.14 per unit
Total fixed cost = Total cost - Variable cost element
= $10,795 - ($8.14 per unit × 853 units)
= $10,795 - $6,943
= $3,852

Inspection Costs at One of Ratulowski Corporation's Factories Are Listed