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Strait Co. manufactures office furniture. During the most productive month of the year, 3,600 desks were manufactured at a total cost of $82,400. In the month of lowest production the company made 1,260 desks at a cost of $55,700. Using the high-low method of cost estimation, total fixed costs are____________.

Respuesta :

Answer:

$41,324

Explanation:

For computing the total fixed cost, first we have to determine the variable cost per desk is shown below:

Variable cost per desk = (High total cost - low total cost) ÷ (High number of desk - low number of desk)

= ($82,400 - $55,700) ÷ (3,600 desks - 1,260 desks)

= $26,700 ÷ 2,340 desk

= $11.41

Now the fixed cost equal to

= High total cost - (High number of desk × Variable cost per desk)

= $82,400 - (3,600 desk × $11.41)

= $82,400 - $41,076

= $41,324

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