Total production costs and output over three periods have been: Period Production costs Output 1 GHS 230, 485 12, 510 units 2 GHS 254,554 14, 970 units 3 GHS 248, 755 14, 450 units What are the estimated variable production costs per unit if the high-low method is applied? A. GHS 9.78 B. GHS 10.65 C. GHS 11.15 D. GHS 15.50
Question
Total production costs and output over three periods have been: Period Production costs Output 1 GHS 230, 485 12, 510 units 2 GHS 254,554 14, 970 units 3 GHS 248, 755 14, 450 units What are the estimated variable production costs per unit if the high-low method is applied? A. GHS 9.78 B. GHS 10.65 C. GHS 11.15 D. GHS 15.50
Solution
To calculate the estimated variable production costs per unit using the high-low method, we need to find the variable cost per unit.
Step 1: Identify the highest and lowest levels of output and their corresponding production costs.
In this case, the highest level of output is 14,970 units with production costs of GHS 254,554, and the lowest level of output is 12,510 units with production costs of GHS 230,485.
Step 2: Calculate the change in production costs and output between the highest and lowest levels.
The change in production costs is GHS 254,554 - GHS 230,485 = GHS 24,069. The change in output is 14,970 units - 12,510 units = 2,460 units.
Step 3: Calculate the variable cost per unit.
Variable cost per unit = Change in production costs / Change in output Variable cost per unit = GHS 24,069 / 2,460 units Variable cost per unit ≈ GHS 9.78
Therefore, the estimated variable production costs per unit, using the high-low method, is approximately GHS 9.78.
So, the correct answer is A. GHS 9.78.
Similar Questions
Required informationSkip to question[The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $80 per unit. The following information pertains to the company’s first year of operations in which it produced 40,000 units and sold 35,000 units. Variable costs per unit: Manufacturing: Direct materials $ 24 Direct labour $ 14 Variable manufacturing overhead $ 2 Variable selling and administrative $ 4 Fixed costs per year: Fixed manufacturing overhead $ 800,000 Fixed selling and administrative expenses $ 496,000 4. What is the company’s net operating income under variable costing?
The following data is available relating to cost and activity:Using the High/Low method, calculate the variable cost per unit.Question 11Answera.1.82b.1.88c.2.50d.2.00
A company has the following annual budget data:Beginning finished goods inventory 52,000 unitsSales 82,000 unitsEnding finished goods inventory 42,000 unitsDirect materials $ 12 per unitDirect labor $ 24 per unitVariable factory overhead $ 5 per unitSelling costs $ 2 per unitFixed factory overhead $ 92,000 What are total budgeted production costs for the year? (CIA adapted)Multiple Choice$3,116,000$2,952,000$3,208,000$3,044,000
Using the information below, what would be the profit under variable costing and absorption costing, respectively?Sales $120,000Units Produced 35,000Units Sold 33,260Budgeted and actual fixed overhead cost $84,000Direct manufacturing cost $21,000Selling and administrative expenses $6,000
Consider the scenario below:A TV manufacturer and seller sold 50 units for a total of P3,750,000 worth of television sets for the month of August 2018. Fixed Expenses at P1,000,000 and Variable Expenses at P888,000.Compute for the Variable Expense per unit.Select one:a.20,670b.15,550c.17,760d.27,260
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.