XYZ Company Incurred the Following Costs for the Month of August

question 16

Essay

XYZ Company incurred the following costs for the month of August when it observed an activity level of 10,000 units. $\begin{array}{llcc} \text { Activity level in units } & \underline{ \underline{10,000}}\\ \text { Variable costs } &\$30,000\\ \text { Fixed costs } &50,000\\ \text { Mixed costs } & \underline{40,000}\\ \text {Total costs } & \underline{ \underline{\$120,000}}\\\end{array}$
During October, the activity level was 16,000 units, and the total costs incurred were $150,000.
a. Calculate the variable costs, fixed costs, and mixed costs incurred during October.
b. Use the high-low method to calculate the cost formula for mixed costs.
c. If the activity level were expected to be 13,800 units for the month of December, what amount of total costs would be expected?

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Definitions:

Scheduled Payments

Regular, predetermined payments made over a period of time in relation to debts or loans.

Economically Equivalent

Situations, assets, or investments that have the same economic value or impact despite being in different forms or structures.

Replacement Payment

A replacement payment is a sum paid to compensate for a loss or replacing a missed payment or asset.

Compounded Quarterly

Interest calculation method where interest is added to the principal every three months, affecting the total interest earned or paid.