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Hi sir John. I have a problem regarding step up cost in high low method questions. Please help me through this question.
Production units: 1200-900-1400
Total costs : 66600-58200-68200
The variable cost per unit is constant up to level of 2000 units but step up of 6000$ in monthly fixed cost occurs when production reaches 1100 units per month.
What is the total costs for the month when 1000 units are produced?
Total cost for the month when 1000 units are produced will be 59000
51000 in fixed costs + variable cost of 8 per unit (1000*8=8000)