Question D3

(a) The following costs have been extracted from the records of Epix Production:

Month Activity level Total cost

Pieces RM

January 12,950 301,250

February 13,900 308,500

March 12,750 295,250

April 13,100 310,500

May 12,890 300,360

June 12,150 282,250

Required:

Calculate the fixed costs per month and variable cost per piece using the

High-Low method. (10 marks)

2. A manufacturing company is searching for a method that helps to identify

variable cost per unit and fixed cost. The owner learns that you have

completed a cost accounting course recently and seeks your opinion.

Required:

Identify and discuss the challenges that management may face when such

method is implemented.