Asked by Emmanuel Garcia on May 18, 2024
Verified
Corris Co. accumulates the following data concerning a mixed cost using miles as the activity level. Miles Driven Total Cost January 10,000$17,000 February 8,00013,500 March 9,00014,400 April 7,00012,500\begin{array}{lrr}&\text { Miles Driven }&\text { Total Cost }\\ \text { January } & 10,000 & \$ 17,000 \\\text { February } & 8,000 & 13,500 \\\text { March } & 9,000 & 14,400 \\\text { April } & 7,000 & 12,500\end{array} January February March April Miles Driven 10,0008,0009,0007,000 Total Cost $17,00013,50014,40012,500 Instructions
Compute the variable and fixed cost elements using the high-low method.
High-Low Method
A technique used in management accounting and cost accounting to split fixed and variable costs based on the highest and lowest levels of activity.
Mixed Cost
Expenses that have both a fixed and variable component, changing with the level of activity.
Variable Cost
Costs that vary directly with the level of production or with the volume of output.
- Utilize the high-low method for the analysis of variable and fixed costs from the provided data.
Verified Answer
Fixed cost = $2000
Learning Objectives
- Utilize the high-low method for the analysis of variable and fixed costs from the provided data.
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