Problem:
July December
Production level, in units........... 5,000 10,000
Variable costs...........................$12,000 $ ?
Fixed costs.............................. ? 18,000
Mixed costs............................ 10,000 ?
Total costs............................. $40,000 $59,000
Q1. Calculate missing costs.
Q2. Calculate cost formula for mixed cost using the high-low method.
Q3. Calculate the total cost that would be incurred for the production of 8,000 units
Q4. Identify the two key cost of behavior assumptions made in the calculation of your answer to part (3).