Question

the manufacturing costs of carrie industries for the first three months of the year are as follows:

\

$$\begin{tabular}{lrr} & total cost & production \\\\ \\hline january & \\$93,300 & 2,300 \\text{ units} \\\\ february & 115,500 & 3,100 \\text{ units} \\\\ march & 79,500 & 1,900 \\text{ units} \\end{tabular}$$

a. using the high-low method, determine the variable cost per unit.
\\$
per unit

b. using the high-low method, determine the total fixed costs.

Explanation:

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<reasoning>

Identify high and low activity levels

Using the High-Low Method knowledge point
\[

$$\begin{aligned} &\text{High Level (February): } 3,100\text{ units},\quad \$115,500\\ &\text{Low Level (March): } 1,900\text{ units},\quad \$79,500 \end{aligned}$$

\]

Calculate variable cost per unit

Using the Variable Cost and High-Low Method knowledge points
\[

$$\begin{aligned} \text{Variable Cost per Unit} &= \frac{\text{High Cost} - \text{Low Cost}}{\text{High Activity} - \text{Low Activity}} \\ &= \frac{\$115,500 - \$79,500}{3,100\text{ units} - 1,900\text{ units}} \\ &= \frac{\$36,000}{1,200\text{ units}} \\ &= \$30\text{ per unit} \end{aligned}$$

\]

Calculate total fixed costs

Using the Fixed Cost and High-Low Method knowledge points
\[

$$\begin{aligned} \text{Fixed Cost} &= \text{Total Cost} - (\text{Variable Cost per Unit} \times \text{Activity}) \\ \text{Using High Level:} \\ \text{Fixed Cost} &= \$115,500 - (\$30 \times 3,100) \\ &= \$115,500 - \$93,000 \\ &= \$22,500 \\ \text{Using Low Level:} \\ \text{Fixed Cost} &= \$79,500 - (\$30 \times 1,900) \\ &= \$79,500 - \$57,000 \\ &= \$22,500 \end{aligned}$$

\]
</reasoning>

<answer>

Question a

Using the high-low method, determine the variable cost per unit.
$ <blank>30</blank> per unit

Question b

Using the high-low method, determine the total fixed costs.
$ <blank>22,500</blank>
</answer>

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Answer:

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<reasoning>

Identify high and low activity levels

Using the High-Low Method knowledge point
\[

$$\begin{aligned} &\text{High Level (February): } 3,100\text{ units},\quad \$115,500\\ &\text{Low Level (March): } 1,900\text{ units},\quad \$79,500 \end{aligned}$$

\]

Calculate variable cost per unit

Using the Variable Cost and High-Low Method knowledge points
\[

$$\begin{aligned} \text{Variable Cost per Unit} &= \frac{\text{High Cost} - \text{Low Cost}}{\text{High Activity} - \text{Low Activity}} \\ &= \frac{\$115,500 - \$79,500}{3,100\text{ units} - 1,900\text{ units}} \\ &= \frac{\$36,000}{1,200\text{ units}} \\ &= \$30\text{ per unit} \end{aligned}$$

\]

Calculate total fixed costs

Using the Fixed Cost and High-Low Method knowledge points
\[

$$\begin{aligned} \text{Fixed Cost} &= \text{Total Cost} - (\text{Variable Cost per Unit} \times \text{Activity}) \\ \text{Using High Level:} \\ \text{Fixed Cost} &= \$115,500 - (\$30 \times 3,100) \\ &= \$115,500 - \$93,000 \\ &= \$22,500 \\ \text{Using Low Level:} \\ \text{Fixed Cost} &= \$79,500 - (\$30 \times 1,900) \\ &= \$79,500 - \$57,000 \\ &= \$22,500 \end{aligned}$$

\]
</reasoning>

<answer>

Question a

Using the high-low method, determine the variable cost per unit.
$ <blank>30</blank> per unit

Question b

Using the high-low method, determine the total fixed costs.
$ <blank>22,500</blank>
</answer>

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