To follow is information about the units produced and total manufacturing costs for Pine Enterprises for the past six months. Month Number of units produced Total manufacturing costs January 9000 $8200 February 7,500 $8,000 March 6,600 $7,550 April 6,800 $7,650 May 5000 $6800 June 7,000 $7,750Using the high-low method, what is the monthly fixed manufacturing cost

Question

Business

Wesley

14 November, 02:37

To follow is information about the units produced and total manufacturing costs for Pine Enterprises for the past six months. Month Number of units produced Total manufacturing costs January 9000 $8200 February 7,500 $8,000 March 6,600 $7,550 April 6,800 $7,650 May 5000 $6800 June 7,000 $7,750Using the high-low method, what is the monthly fixed manufacturing cost

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Demarcus Harrington · Answer 1

The monthly fixed manufacturing cost is $7500.

Explanation:

Variable cost per unit = change in total cost / change in no of units

= 6900-5000/8000-4200

= 0.5 per unit

Fixed cost = Total manfacturing cost - variable cost at a 4200 level

= 5000 - (4200*0.5)

= 5000 - 2100

= $2900

If company produces 9200 units:

Total manfacturing costs = fixed costs + 9200*variable cost per unit

= 2900 + (9200*0.5)

= $7500

Therefore, The monthly fixed manufacturing cost is $7500.