If 6000 toys are produced at a total variable cost of

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Unformatted text preview: oys are produced at a total variable cost of $126,000, what is the total variable cost of 4,000 toys? A. $84,000 B. $126,000 C. $210,000 D. None of the above Learning Objective 4 Analyze a mixed or semivariable cost using the high-low method The High­Low Method – An Example The variable cost per hour of maintenance is equal to the change in cost divided by the change in hours $2,400 = $6.00/hour 400 The High­Low Method – An Example Total Fixed Cost = Total Cost – Total Variable Cost Total Fixed Cost = $9,800 – ($6/hour × 850 hours) Total Fixed Cost = $9,800 – $5,100 Total Fixed Cost = $4,700 The High­Low Method – An Example The Cost Equation for Maintenance Y = $4,700 + $6.00X Example – Mixed Cost Sales salaries and commissions are $10,000 when 80,000 units are sold, and $14,000 when 120,000 units are sold. Using the high-low method, what is the variable portion of sales salaries and commission? Units Cost High level 120,000 $ 14,000 Low level 80,000 10,000 Change 40,000 $ 4,000 $4,000 ÷...
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