the following information is available for a companys cost of sales over the last four months. using the…

the following information is available for a companys cost of sales over the last four months. using the high - low method, the estimated total fixed cost is: multiple choice $19,332 $29,200. $25,682 $77,328. $38,664.

the following information is available for a companys cost of sales over the last four months. using the high - low method, the estimated total fixed cost is: multiple choice $19,332 $29,200. $25,682 $77,328. $38,664.

Answer

Explanation:

Step1: Identify high and low activity levels

High: April (2,580 units, $57,000) Low: January (580 units, $27,800)

Step2: Calculate variable cost per unit

Variable cost per unit ($v$) = $\frac{\text{Change in cost}}{\text{Change in units}}$ Change in cost = $57,000 - 27,800=29,200$ Change in units = $2,580 - 580 = 2,000$ $v=\frac{29,200}{2,000}=14.6$

Step3: Calculate fixed cost

Using high - activity data: $y = vx + f$ (where $y$ is total cost, $x$ is units, $f$ is fixed cost) $57,000=14.6\times2,580 + f$ $57,000 = 37,668+f$ $f=57,000 - 37,668 = 19,332$

Answer:

$19,332$