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28 Sep 2019
Alden Co.âs monthly unit sales and total cost data for its operating activities of the past year follow. Management wants to use these data to predict future fixed and variable costs.
Month Units Sold Total Cost Month Units Sold Total Cost 1 318,000 $ 155,500 7 362,000 $ 292,624 2 163,000 99,250 8 268,000 149,750 3 263,000 203,600 9 76,400 67,000 4 203,000 98,000 10 148,000 128,625 5 288,000 199,500 11 92,000 92,000 6 188,000 110,000 12 98,000 83,650 Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. (Do not round intermediate calculations.)
High-Low method - Calculation of Variable Cost per Sales Dollar Change in cost Cost at high point minus cost at low point $225,624 Variable cost per sales dollar = $0.79 Change in volume Volume at high point minus volume at low point $285,600 High-Low method - Calculation of Fixed Costs Total cost at the high point $292,624.00 Variable costs at the high point: Volume at the high point: 362,000 units sold Variable cost per sales dollar $0.79 Total variable costs at the high point 285,980.00 Total fixed costs Total cost at the low point Variable costs at the low point: Volume at the low point: Variable cost per sales dollar Total variable costs at the low point Total fixed costs
Predict future total costs when sales volume is (a) 376,000 units and (b) 416,000 units.
Predictions Sales (units) 376,000 416,000 Total costs $0 $0
Alden Co.âs monthly unit sales and total cost data for its operating activities of the past year follow. Management wants to use these data to predict future fixed and variable costs.
Month | Units Sold | Total Cost | Month | Units Sold | Total Cost | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1 | 318,000 | $ | 155,500 | 7 | 362,000 | $ | 292,624 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | 163,000 | 99,250 | 8 | 268,000 | 149,750 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | 263,000 | 203,600 | 9 | 76,400 | 67,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | 203,000 | 98,000 | 10 | 148,000 | 128,625 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | 288,000 | 199,500 | 11 | 92,000 | 92,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | 188,000 | 110,000 | 12 | 98,000 | 83,650 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. (Do not round intermediate calculations.)
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Predict future total costs when sales volume is (a) 376,000 units and (b) 416,000 units.
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Keith LeannonLv2
28 Sep 2019