Felix & Co. reports the following information about its sales and cost of sales.

Felix & Co. reports the following information about its sales and cost of sales.

  

Period	UnitsSold	Cost of Sales		Period	UnitsSold	Cost of Sales
1	0	$	2,500	6	2,000	5,500
2	400		3,100	7	2,400	6,100
3	800		3,700	8	2,800	6,700
4	1,200		4,300	9	3,200	7,300
5	1,600		4,900	10	3,600	7,900

 

Hint: (Draw an estimated line of cost behavior using a scatter diagram offline.)

 

Complete the below table to calculate the fixed cost and variable cost of sales by using the high-low method.   Explanation: The scatter diagram and line of estimated cost behavior appear below.     Selecting 0 and 2,400 units sold as the activity levels yields $2,500 as the estimate of fixed costs and the following estimate of variable costs per unit.   Change in cost   $6,100 − $2,500   $3,600     = =  =  $1.50 per unit Change in units   2,400 − 0   2,400     Using the high-low method yields $2,500 as the estimate of fixed costs and variable costs per unit of:   Change in cost   $7,900 − $2,500   $5,400     = =  =  $1.50 per unit Change in units   3,600 − 0   3,600