EXERCISE 5-12 (30 MINUTES)

1. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE
1. High-low method:

Number of

Scans Utilities Cost

High level of activity .... 150 $4,000 Low level of activity... 60 2,200 Change ... 90 $1,800 Change in cost $1,800Variable rate: = =$20 per scanChange in activity 90 scansFixed cost: Total cost at high level of activity... $4,000 Less variable element: 150 scans × $20 per scan ... 3,000 Fixed cost element ... $1,000 Therefore, the cost formula is: Y = $1,000 + $20X.