Problem
Fagesi Ltd incurred the costs as indicate below. During the six months ended 30 Dec, these costs changed, but not in direct relation to the volume.
|
MONTH
|
NUMBER OF UNITS PRODUCED
|
HISTORICAL COST
|
|
JULY
|
980
|
P19 800
|
|
AUGUST
|
1000
|
P20 000
|
|
SEPT
|
1050
|
P20 500
|
|
OCT
|
950
|
P19 500
|
|
NOV
|
1040
|
P20 400
|
|
DEC
|
1060
|
P20 600
|
Task
1. Use high-low method to determine the variable cost per unit and the total fixed costs.
2. Forecast on the total cost if an estimated 1 100 units are to be manufactured in January the following year.