question archive Noriel company has collected the following information over the last six months: Month units produced cost July 10,000 P20,000 August 12,000 20,500 Sept 13,000 20,600 Oct 14,000 21,000 Nov 11,000 20,050 Dec 18,000 21,600 Using the high-low method, what is the estimated total cost in month when 14,000 units are produced Choices: 21,000 24,800 25,943 20,800
Noriel company has collected the following information over the last six months: Month units produced cost July 10,000 P20,000 August 12,000 20,500 Sept 13,000 20,600 Oct 14,000 21,000 Nov 11,000 20,050 Dec 18,000 21,600 Using the high-low method, what is the estimated total cost in month when 14,000 units are produced Choices: 21,000 24,800 25,943 20,800
Subject:AccountingPrice:2.86 Bought7
Noriel company has collected the following information over the last six months:
Month units produced cost
July 10,000 P20,000
August 12,000 20,500
Sept 13,000 20,600
Oct 14,000 21,000
Nov 11,000 20,050
Dec 18,000 21,600
Using the high-low method, what is the estimated total cost in month when 14,000 units are produced
Choices:
- 21,000
- 24,800
- 25,943
- 20,800
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Answer: 20,800
Workings:
variable cost per unit = (Cost at highest units produced- Cost at lowest units produced)/ (highest units-lowest units)
=(21,600-20,000)/(18,000-10,000)
=1600/8000
=0.2
Fixed Cost Per Unit
= Cost at highest units produced- ( units produced x variable cost per unit)
=21600-(18,000 x0.2)
=18,000
Assuming a linear function , Y= a + bx, where Y is the total cost, a = fixed cost, b is the variable cost per unit and x the number of units produced, then;
Y= 18,000+0.2x
Total cost for 14,000 units:
Y= 18,000+ (0.2* 14000)
=20,800
