accounting homework 7.3

accounting homework 7.3 - Problem 12.18 A B C D Calculate...

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Problem 12.18 A. Calculate the missing cost. B. Calculate the cost formula for mixed cost using the high-low method. C. Calculate the total cost that would be incurred for the production of 20,000 units. D. Identify the two key cost behavior assumptions made in the calculation of your answer to part A. The total cost = Fixed costs + Variable costs + Mixed costs $70,000 = Fixed costs + 21,000 + 18,000 Therefore the fixed costs = 70,000 – 21,000 – 18,000 Which would equal $31,000 Variable cost for this period would be calculated by Cost/Number of units produced = $ 21,000 12,000 units which would equal $1.75 Variable for august should be calculated as Number of units produced x Variable cost per unit 18,000 units x 1.75 =31,5000 Therefore the next step would be to solve for the mixed costs this would be done by solving with the following equation: Total costs = Fixed costs + Variable costs + Mixed costs The mixed costs in August
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