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Question 19.1: The manufacturing costs of Alex Industries for the first thr...

The manufacturing costs of Alex Industries for the first three months of the year are provided below.

Total Cost Production
January $ 80,000 1,000 units
February 125,000 2,500
March 100,000 1,800

Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost.

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a. $30 per unit = ($125,000 – $80,000)/(2,500 – 1,000)
b. $50,000 = $125,000 – ($30 × 2,500), or $80,000 – ($30 × 1,000)

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