Alden Company's monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Month Units Sold 1 HNmin 10. 2 3 4 5 6 320,000 160,000 280,000 200,000 300,000 200,000 Total Cost Month $ 160,000 7 100,000 220,000 100,000 230,000 120,000 168 9 10 11 12 Units Sold 340,000 280,000 80,000 160,000 100,000 110,000 Total Cost $ 220,000 160,000 64,000 140,000 100,000 80,000 1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. (Do not round intermediate calculations.)
Alden Company's monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Month Units Sold 1 HNmin 10. 2 3 4 5 6 320,000 160,000 280,000 200,000 300,000 200,000 Total Cost Month $ 160,000 7 100,000 220,000 100,000 230,000 120,000 168 9 10 11 12 Units Sold 340,000 280,000 80,000 160,000 100,000 110,000 Total Cost $ 220,000 160,000 64,000 140,000 100,000 80,000 1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. (Do not round intermediate calculations.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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High-low method
A technique of making analysis about the highest cost and lowest cost with respect to its number of units is called a high-low method. Firstly, it determines the cost of variables and then fixed cost is determined by taking difference between variable cost and total cost.
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