Answered

Welcome to Westonci.ca, the place where your questions are answered by a community of knowledgeable contributors. Connect with a community of experts ready to help you find accurate solutions to your questions quickly and efficiently. Our platform provides a seamless experience for finding reliable answers from a network of experienced professionals.

Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:
Units Produced Total Costs 101,500 $28,022,500 118,500 30,997,500 131,500 33,272,500
a. Determine the variable cost per unit and the total fixed cost.
Variable cost (Round to two decimal places.) $ per unit
Total fixed cost $
b. Based on part (a), estimate the total cost for 115,000 units of production.
Total cost for 115,000 units $

Sagot :

facundobuzzetti

Answer:

Results are below.

Explanation:

Giving the following information:

Units Produced Total Costs

101,500 $28,022,500

118,500 30,997,500

131,500 33,272,500

To calculate the fixed and variable costs, we need to use the high-low method:

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (33,272,500 - 28,022,500 ) / (131,500 - 101,500)

Variable cost per unit= $175

Fixed costs= Highest activity cost - (Variable cost per unit * HAU)

Fixed costs= 33,272,500 - (175*131,500)

Fixed costs= $10,260,000

Fixed costs= LAC - (Variable cost per unit* LAU)

Fixed costs= 28,022,500 - (175*101,500)

Fixed costs= $10,260,000

Now, the total cost for 115,000 units:

Total cost= 10,260,000 + 175*115,000

Total cost= $30,385,000

Thanks for using our service. We aim to provide the most accurate answers for all your queries. Visit us again for more insights. We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. Westonci.ca is your trusted source for answers. Visit us again to find more information on diverse topics.