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    flone's Avatar
    flone Posts: 1, Reputation: 1
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    #1

    Aug 16, 2009, 03:26 AM
    Cost of sales
    A company produced the following data for selling costs at different levels of sales:

    Sales ( Units) Total Selling Costs ( $)
    3,000 145,000
    2,400 116,000

    Fixed costs increase by $20,000 when the sales level is higher than 2,500 units

    What is the fixed selling cost at sales level of 2600 Units?
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
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    #2

    Aug 16, 2009, 10:37 AM

    It is advisable to post your answer for correction and guidance. Please read the guidelines for homework help.

    As a guideline, this question relates to high low method. If you have read the text book correctly, you will be able to solve the problem. Since the fixed costs increase after a certain level, you have to adjust the additional fixed costs. You can then work out variable cost per unit and the related fixed costs. To calculate overheads for 2600 units apply the variable rate and add the regular and additional fixed costs.
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #3

    Aug 16, 2009, 10:39 AM
    It is advisable to post your answer for correction and guidance. Please read the guidelines for homework help.

    As a guideline, this question relates to high low method. If you have read the text book correctly, you will be able to solve the problem. Since the fixed costs increase after a certain level, you have to adjust the additional fixed costs. You can then work out variable cost per unit and the related fixed costs. To calculate overheads for 2600 units apply the variable rate and add the regular and additional fixed costs.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #4

    Aug 16, 2009, 04:28 PM

    Here is an old thread showing examples of two different methods to solve these. One is an algebraic approach and one is not. See if you can apply whichever your book is using to your problem.

    https://www.askmehelpdesk.com/accoun...od-223233.html
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