BE 20-1High-Low Method1The manufacturing costs of Rosenthal Industries for the first three months of the year follow: Total Costs Units ProducedJanuary$1,890,000 22,500 unitsFebruary2,800,000 35,000March4,230,000 55,000Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost.

High low method is used in accounting to separate the variable cost & fixed cost from limited…

Answered: BE 20-1 High-Low Method 1The…

Accounting

27th Edition

ISBN:9781337272094

Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Chapter21: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 21.17EX

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BE 20-1

High-Low Method

1The manufacturing costs of Rosenthal Industries for the first three months of the year follow:

	Total Costs	Units Produced
January	$1,890,000	22,500 units
February	2,800,000	35,000
March	4,230,000	55,000

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

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Appendix Absorption costing income statement On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable existing concept: Sales (420,000 units) 7,450,000 Variable cost of goods sold: Variable cost of goods manufactured (500,000 units x 14 per unit) 7,000,000 Less ending inventory (80,000 units x 14 per unit) 1,120,000 Variable cost of goods sold 5,880,000 Manufacturing margin 1,570,000 Variable selling and administrative expenses 80,000 Contribution margin 1,490,000 Fixed costs: Fixed manufacturing costs 160,000 Fixed selling and administrative expenses 75,000 235,000 Income from operations 1,255,000 a. Prepare an absorption costing income statement. b. Reconcile the variable costing income from operations of 1,255,000 with the absorption costing income from operations determined in (a).

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