Variable cost per unit = Change in cost ÷ Change in activity = $3,000 ÷ 4,000 = $0.75 per unit Fixed cost = Total cost - Variable cost element = $12,000 - ($0.75 per unit × 10,000 units) = $12,000 - $7,500 = $4,500 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 01-04 Analyze a mixed cost using a scattergraph plot and the high-low method. Topic: The Analysis of Mixed Costs 87. Maintenance costs at a Tierce Corporation factory are listed below: Management believes that maintenance cost is a mixed cost that depends on machine-hours. Using the high-low method to estimate the variable and fixed components of this cost, these estimates would be closest to:
Variable cost per unit = Change in cost ÷ Change in activity = $3,000 ÷ 4,000 = $0.75 per unit Fixed cost = Total cost - Variable cost element = $12,000 - ($0.75 per unit × 10,000 units) = $12,000 - $7,500 = $4,500 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Difficulty: 1 Easy Learning Objective: 01-04 Analyze a mixed cost using a scattergraph plot and the high-low method. Topic: The Analysis of Mixed Costs 87. Maintenance costs at a Tierce Corporation factory are listed below: Management believes that maintenance cost is a mixed cost that depends on machine-hours. Using the high-low method to estimate the variable and fixed components of this cost, these estimates would be closest to: