A- Farah Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product which it sells at $132.7 per unit

Production volume

12,500

units

14,000

units

Direct materials

$

713,750

$

799,400

Direct labor

$

256,250

$

287,000

Manufacturing overhead (Mixed)

$

1,004,700

$

1,027,350

Fixed selling and administrative expenses

$

384,050

$

384,050

Required: Using high-low method and CVP analysis

1. Compute Farah's breakeven point in units and dollars. Prove your answer

2. Compute how many units the company needs to sell to earn a profit of $ 600,000.

3. Compute the selling price per unit of the company if BEP (units) is 40,000 units and the variable cost per unit and total fixed cost does not change.

4. Explain the various methods used to estimate the variable component and the fixed component of themixed cost (Excluding Scattergraph method) and state which method is the most accurate? Why?