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    Computing the variable and fixed cost elements using the high-load method

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    The Smith Company has accumulated the following data concerning a mixed cost. The company is using the units produced as the activity level.

    Units Produced Total Cost
    August 10,000 $14,940
    September 8,600 $13,450
    October 7,100 $11,200
    November 7,700 $12,200
    December 8,200 $12,660

    1. Using the high-low method, compute the variable and fixed cost elements.
    2. If the company produces 8,000 units, estimate the total cost.

    1 - 2 pages - written in APA format with references.

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    Solution Preview

    Smith Company: Behavior of Costs
    Costs can be classified into variable and fixed. Costs are said to be variable if they vary in total relative to a cost driver such as machine hours, direct labor hours, etc. on the other hand, costs are said to be fixed if these costs, in total, do not change relative to the identified ...

    Solution Summary

    This solution involves compute Smith Company's variable and fixed costs using the high-low method. The expert estimates the total cost.