High-Low Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions (1) through (3) that follow. Units Produced 4,360 units 275 1,000 7,775 1,750 3,015 January February March April May June Total Cost $65,600 6,250 15,000 118,750 32,500 48,000 1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Tutal Costs - (Variable Cost Per Unit x Number of Units Produced) Fixed Cost, Complete the following table. Total Fixed Cost Variable Cost per Unit 4
High-Low Biblio Files Company is the chief competitor of Cover-to-Cover Company in the bookshelf business. Biblio Files is analyzing its manufacturing costs, and has compiled the following data for the first six months of the year. After reviewing the data, answer questions (1) through (3) that follow. Units Produced 4,360 units 275 1,000 7,775 1,750 3,015 January February March April May June Total Cost $65,600 6,250 15,000 118,750 32,500 48,000 1. From the data previously provided, help Biblio Files Company estimate the fixed and variable portions of its total costs using the high-low method. Recall that Tutal Costs - (Variable Cost Per Unit x Number of Units Produced) Fixed Cost, Complete the following table. Total Fixed Cost Variable Cost per Unit 4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Step 1: Introducing High Low Method
VARIABLE COST
Variable Cost is a cost that varies with the level of output.
Variable costs include costs of goods sold (COGS), raw materials and inputs to production, packaging, wages, etc.
FIXED COST
Fixed costs are costs that constant at any level of activity.
fixed costs are rent and lease costs, salaries, utility bills, insurance, loan repayments, Depreciation, Advertisement etc
HIGH LOW METHOD
Under High Low Method Variable Cost Per Unit is Computed :—
= (Total cost at highest level - Total cost at lowest level) ÷ (Highest level - Lowest level)
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