High-low method
The following information is available regarding the total repair costs of Alexander Design Company for six months of 2018:
(a)Using the high-low method,compute the following:
(1)The variable element of repair cost per unit of production:
$________ per unit
(2)The fixed element of the monthly repair cost: $________
(b)Use the cost relationship determined in part a to estimate the total repair cost for July 2018,given that production is scheduled for 2,300 units.$________
Definitions:
Average Operating Assets
The average value of the assets that are used in the day-to-day operations of a business, calculated over a specific period.
Operating Assets
Operating assets are long-term assets used in the operations of a business to generate revenue.
Contribution Margin
The amount by which the sale of products or services exceeds variable costs, contributing to the coverage of fixed costs and profit generation.
Controllable Fixed Costs
Fixed costs that can be adjusted or influenced by the decisions of management in the short term, such as advertising expenses.
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