The high Low method is used to determine the variable cost and fixed cost from mixed costs by considering total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity. To calculate: The variable and fixed cost elements using the high low method.

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Answer 1

Question

Chapter 22, Problem 5E

a.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by considering total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To calculate: The variable and fixed cost elements using the high low method.

b.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by taking into account the total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To prepare: A graph showing the behaviour of maintenance cost.

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The controller of the Blade Company wants you to estimate a cost function from the following two observations in a general ledger account called Maintenance: (Click to view the information.) Required 1. Estimate the cost function for maintenance. 2. Can the constant in the cost function be used as an estimate of fixed maintenance cost per month? Explain. Requirement 1. Estimate the cost function for maintenance. (Round your answers to the nearest cent as needed.) Maintenance costs = Maintenance costs = +( +( X X Requirement 2. Can the constant in the cost function be used as an estimate of fixed maintenance cost per month? Explain. the relevant range, not at cost levels the relevant range. If there are no months with zero The cost function in requirement 1 is an estimate of how costs behave machine-hours represented in the maintenance account, data in that account function provides the best available starting point for a straight line that approximates how a cost behaves be used to…

The controller of Sandhill Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Month January February March April May June Variable cost per machine hour Total Maintenance Costs Determine the variable-cost components using the high-low method. (Round answer to 2 decimal places e.g. 2.25.) Determine the fixed cost components using the high-low method. Fixed costs $2,825 3,210 3,852 4,815 3,424 5,476 Total Machine Hours 3,740 4,280 6,420 8,453 5,350 8,560 $ $

The controller of Blossom Industries has collected the following monthly expense data for use in analyzing the cost behaviour of maintenance costs: Total Total Month Maintenance Costs Machine Hours January $2,750 2,850 February 3,150 4,400 March 4,000 6.250 April 4,520 8,250 May 3,320 5.000 June 5,693 8,300 (a1) Determine the variable-cost component using the high-low method. (Round answer to 2 decimal places e.g. 12.25.)

Answer 2

Question

Chapter 22, Problem 5E

a.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by considering total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To calculate: The variable and fixed cost elements using the high low method.

b.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by taking into account the total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To prepare: A graph showing the behaviour of maintenance cost.

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Answer 3

Question

Chapter 22, Problem 5E

a.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by considering total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To calculate: The variable and fixed cost elements using the high low method.

b.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by taking into account the total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To prepare: A graph showing the behaviour of maintenance cost.

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Answer 4

Question

Chapter 22, Problem 5E

a.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by considering total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To calculate: The variable and fixed cost elements using the high low method.

b.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by taking into account the total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To prepare: A graph showing the behaviour of maintenance cost.

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Answer 5

Chapter 22, Problem 5E

a.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by considering total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To calculate: The variable and fixed cost elements using the high low method.

b.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by taking into account the total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To prepare: A graph showing the behaviour of maintenance cost.

Answer 6

Chapter 22, Problem 5E

a.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by considering total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To calculate: The variable and fixed cost elements using the high low method.

Answer 7

Chapter 22, Problem 5E

a.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by considering total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To calculate: The variable and fixed cost elements using the high low method.

Answer 8

b.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by taking into account the total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To prepare: A graph showing the behaviour of maintenance cost.

Answer 9

b.

To determine

Concept Introduction:

The high Low method is used to determine the variable cost and fixed cost from mixed costs by taking into account the total cost incurred at the high and low activity levels. The difference between costs at high and low levels represents variable costs because the variable cost element changes with a change in the level of activity.

To prepare: A graph showing the behaviour of maintenance cost.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 22 - Prob. 1Q Ch. 22 - Prob. 2Q Ch. 22 - Prob. 3Q Ch. 22 - Prob. 4Q Ch. 22 - Prob. 5Q Ch. 22 - Prob. 6Q Ch. 22 - Prob. 7Q Ch. 22 - Prob. 8Q Ch. 22 - 9. “Cost-volume-profit (CVP) analysis is based...Ch. 22 - Prob. 10Q

Solution Summary: The author explains that the high low method is used to determine the variable cost and fixed cost from mixed costs by taking into account the total cost incurred at high and low activity levels.

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