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Seifer Inc.'s inspection costs are listed below: Units Produced Inspection Costs April 119 $ 8,558 May 117 $ 8,535 June 113 $ 8,150 July 125 $ 8,736 August 152 $ 9,357 September 108 $ 8,321 October 120 $ 8,603 November 192 $ 10,337 Management believes that inspection cost is a mixed cost that depends on the number of units produced. Required: Using the high-low method, the estimates of the fixed component of inspection cost would be closest to:a.$22 per unit plus $6,000 per month

b.$14 per unit plus $8,000 per month

c.$25 per unit plus $5,400 per month

d.$18 per unit plus $6,800 per month

Respuesta :

Answer:

$26 and $5,345

Explanation:

The computation of the fixed cost and the variable cost per unit by using high low method is shown below:

Variable cost per unit = (High inspection cost - low inspection cost) ÷ (High units produced - low units produced)

= ($10,337 - $8,150) ÷ (192 units - 108 units)

= $2,187 ÷ 84 units

= $26

Now the fixed cost equal to

= High inspection cost - (High units produced × Variable cost per unit)

= $10,337 - (192 units × $26)

= $10,337 - $4,992

= $5,345

This is the answer but the same is not provided in the given options

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