Question
High-Low Method Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the
High-Low Method
Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:
Units Produced | Total Costs | |||
2,665 | $435,420 | |||
4,240 | 445,100 | |||
6,765 | 677,320 |
a. Determine the variable cost per unit and the total fixed cost.
Variable cost: (Round to the nearest dollar.) | $ per unit |
Total fixed cost: | $ |
b. Based on part (a), estimate the total cost for 3,390 units of production.
Total cost for 3,390 units: | $ Sales Mix and Break-Even Sales Data related to the expected sales of laptops and tablets for Tech Products Inc. for the current year, which is typical of recent years, are as follows:
The estimated fixed costs for the current year are $2,250,000. Required: 1. Determine the estimated units of sales of the overall (total) product, E, necessary to reach the break-even pointfor the current year. units 2. Based on the break-even sales (units) in part (1), determine the unit sales of both laptops and tablets for the current year.
3. Assume that the sales mix was 60% laptops and 40% tablets. Compare the breakeven point with that in part (1). Why is it so different? units The break-even point is in this scenario than in part (1) because the sales mix is toward the product with the higher of product. |
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