A department of Omega Co. incurred the following costs for the
month of July. Variable costs, and the variable portion of mixed costs, are a function of
the number of units of activity:
Activity level in units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Variable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,000
Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Mixed costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Total costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,000
During August the activity level was 16,000 units, and the total costs incurred were
$141,000.
Required:
a. Calculate the variable costs, ?xed costs, and mixed costs incurred during August.
b. Use the high-low method to calculate the cost formula for mixed cost.