Dont Have one

4-5

High-low method:

Estimate of variable cost =

Here, the cost at highest level of activity (July) = $20,500

The cost at lowest level of activity (May) = 8,500

Highest level of activity (July) = 900,000

Lowest level of activity (May) = 300,000

Estimate of variable cost = 20,500- 8,500 / 900,000-300,000 =

12,000/600,000 =.02 per copy

Lowest level of activity (340,200 units);

Total variable cost = variable cost per unit x total units

= $0.02 x 300,000 Total variable cost lowest activity = $6,000

The total cost at the lowest activity = $8,500

Fixed cost at lowest activity = Total cost - Variable cost

= 8,500 - 6,000

Fixed cost at lowest activity = $2,500

High-low method:

Estimate of variable cost =

Here, the cost at highest level of activity (July) = $20,500

The cost at lowest level of activity (May) = 8,500

Highest level of activity (July) = 900,000

Lowest level of activity (May) = 300,000

Estimate of variable cost = 20,500- 8,500 / 900,000-300,000 =

12,000/600,000 =.02 per copy

Lowest level of activity (340,200 units);

Total variable cost = variable cost per unit x total units

= $0.02 x 300,000 Total variable cost lowest activity = $6,000

The total cost at the lowest activity = $8,500