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Cost estimation using high-low method P1 Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Units Sold 1.... 195,000 2.... 125,000 3.... 105,000 4.... 155,000 5.... 95,000 6.... 215,000 Month Total Cost $ 97,000 87,000 73,000 89,000 81,000 110,000 Month 7... 8... 9... 10 ... 85,000 11... 175,000 12... 115,000 Units Sold 145,000 185,000 135,000 Total Cost $ 93,000 105,000 85,000 58,000 95,000 79,000 Required 1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. 2. Use the answers for variable and fixed costs from part 1 to predict future total costs when sales volume is (a) 100,000 units and (b) 170,000 units.

Cost estimation using high-low method P1 Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Units Sold 1.... 195,000 2.... 125,000 3.... 105,000 4.... 155,000 5.... 95,000 6.... 215,000 Month Total Cost $ 97,000 87,000 73,000 89,000 81,000 110,000 Month 7... 8... 9... 10 ... 85,000 11... 175,000 12... 115,000 Units Sold 145,000 185,000 135,000 Total Cost $ 93,000 105,000 85,000 58,000 95,000 79,000 Required 1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. 2. Use the answers for variable and fixed costs from part 1 to predict future total costs when sales volume is (a) 100,000 units and (b) 170,000 units.

Financial & Managerial Accounting
Financial & Managerial Accounting
14th Edition
ISBN:9781337119207
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter19: Cost-Volume-Profit Analysis
Section: Chapter Questions
Problem 19.17EX
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PROBLEM SET B Problem 21-1B Cost estimation using high-low method P1 Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Units Sold 1.... 2.... 195.000 125,000 3.... 105,000 4.... 155,000 5.... 95,000 6.... 215,000 Month Total Cost $ 97,000 87,000 73,000 89,000 81,000 110,000 Month 7 ... 8... 9... 10 ... 11 ... 12 ... Units Sold 145,000 185,000 135,000 85,000 175,000 115,000 Total Cost $ 93,000 105,000 85,000 58,000 95,000 79,000 Required 1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. 2. Use the answers for variable and fixed costs from part 1 to predict future total costs when sales volume is (a) 100,000 units and (b) 170,000 units. Analysis Component page 799 3. Use these data to prepare a scatter diagram. Draw an estimated line of cost behavior and determine whether the cost appears to be variable, fixed, or mixed.
Transcribed Image Text:PROBLEM SET B Problem 21-1B Cost estimation using high-low method P1 Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Units Sold 1.... 2.... 195.000 125,000 3.... 105,000 4.... 155,000 5.... 95,000 6.... 215,000 Month Total Cost $ 97,000 87,000 73,000 89,000 81,000 110,000 Month 7 ... 8... 9... 10 ... 11 ... 12 ... Units Sold 145,000 185,000 135,000 85,000 175,000 115,000 Total Cost $ 93,000 105,000 85,000 58,000 95,000 79,000 Required 1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. 2. Use the answers for variable and fixed costs from part 1 to predict future total costs when sales volume is (a) 100,000 units and (b) 170,000 units. Analysis Component page 799 3. Use these data to prepare a scatter diagram. Draw an estimated line of cost behavior and determine whether the cost appears to be variable, fixed, or mixed.
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