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    P12.17 High-low method Alpha Co. October activity

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    P12.17
    High-low method A department of Alpha Co. incurred the following costs for the month of September. Variable costs, and the variable portion of mixed costs, are a function of the number of units of activity:
    Activity level in units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
    Variable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000
    Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
    Mixed costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
    Total costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,000
     
    During October the activity level was 8,000 units, and the total costs incurred were $70,500.
    Required:
    a. Calculate the variable costs, fixed costs, and mixed costs incurred during October.
    b. Use the high-low method to calculate the cost formula for mixed cost.

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