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Unformatted text preview: and derive the cost function using the high level of activity. Required: With this information determine the variable DLHr cost using the High-Low Method. Problem Change in cost = Cost at High Level of Activity - Cost at Low Level of Activity Change in cost = $8, 900 - $7,000 = $1,900 Solution Change in activity = Activity High Level of Activity - Activity at Low Level of Activity Change in activity = 730 - 500 = 230 Variable Cost = $1900/230 = $8.26 DLHr Cost Function Y = b = Mx = TC = FC + VC = $8,900 = FC+ $8.26 (730) $8,900 = FC + $6030 $8900 $6030 = FC $2878 = FC TC = $2878+$8.26(x)...
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- Spring '11
- Managerial Accounting