Asked by Desirea Moore on May 27, 2024
Verified
Global Publishers has collected the following data for recent months: 
?Required
(a) Using the high-low method, find the variable cost per unit and total fixed costs.
(b) What is the estimated cost for a month in which 19,000 issues are published?If required, round answer to the nearest cent.
High-low Method
A technique in cost accounting used to estimate fixed and variable costs by analyzing the highest and lowest levels of activity and their respective costs.
Variable Cost Per Unit
The cost that varies with the level of output or production, calculated on a per-unit basis.
Fixed Costs
Expenses that remain constant for a business regardless of the level of production or sales volume.
- Utilize the high-low technique to ascertain per unit variable expenses and total fixed costs.
Verified Answer
(a) Variable Cost per Unit = ($22,464 - $18,495)/ (21,800 - 17,750) = $0.98 per unitTotal Fixed Costs = $18,495 - (17,750 × $0.98) = $1,100Total Cost = $1,100 + ($0.98 × Number of Issues Published)
(b) Total Cost = $1,100 + ($0.98 × 19,000) = $19,720
Learning Objectives
- Utilize the high-low technique to ascertain per unit variable expenses and total fixed costs.
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