The manufacturing costs of Carrefour Enterprises for the first three months of the year are provided below

The manufacturing costs of Carrefour Enterprises for the first three months of the year are provided below.

                          Total Costs | Units Produced
June                      $300,000 | 2,700 units
July.                        440,000 | 5,500
August                    325,000 | 3,500

Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost.

Answer:
a. $50 per unit = ($440,000 – $300,000) ÷ (5,500 units – 2,700 units)
b. $165,000 = $440,000 – ($50 × 5,500 units), or $300,000 – ($50 × 2,700 units)


The manufacturing costs of Buckley Industries for three months of the year are provided below.

                  Total Costs | Units Produced
January              $240,000 | 10,000 units
February.             546,000 | 26,000
March                 700,000 | 30,000

Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost.

Answer:
a. $23 per unit = ($700,000 – $240,000) ÷ (30,000 units – 10,000 units)
b. $10,000 = $700,000 – ($23 × 30,000 units), or $240,000 – ($23 × 10,000 units)