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  • Highlands Manufacturing: Variable Cost

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    Mark Lana
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    The document discusses the calculation of variable and fixed costs for a manufacturing company based on its highest and lowest production levels. It shows that as production increased from 1,200 to 3,000 units, factory overhead costs increased from P31,100 to P70,000. The variable cost per unit was calculated as P21.61 based on the change in overhead costs over the change in production. Variable costs were then calculated for the highest and lowest production levels, with the remainder being fixed costs of around P5,170 at the highest level and P5,168 at the lowest level.

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    BSBA2A_ACT01

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    The document discusses the calculation of variable and fixed costs for a manufacturing company based on its highest and lowest production levels. It shows that as production increased from 1,200 to 3,000 units, factory overhead costs increased from P31,100 to P70,000. The variable cost per unit was calculated as P21.61 based on the change in overhead costs over the change in production. Variable costs were then calculated for the highest and lowest production levels, with the remainder being fixed costs of around P5,170 at the highest level and P5,168 at the lowest level.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    18 views1 page

    Highlands Manufacturing: Variable Cost

    Uploaded by

    Mark Lana
    The document discusses the calculation of variable and fixed costs for a manufacturing company based on its highest and lowest production levels. It shows that as production increased from 1,200 to 3,000 units, factory overhead costs increased from P31,100 to P70,000. The variable cost per unit was calculated as P21.61 based on the change in overhead costs over the change in production. Variable costs were then calculated for the highest and lowest production levels, with the remainder being fixed costs of around P5,170 at the highest level and P5,168 at the lowest level.

    Copyright:

    © All Rights Reserved
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    of 1

    LANA, CHABELITA A.

    ONLINE ACTIVITY 01

    BSBA 2-A

    HIGHLANDS MANUFACTURING

    A. Change in Cost and Change in Activity

    UNITS FACTORY OVERHEAD COST


    Highest P3,000 P70,000
    Lowest 1,200 31,100
    Difference 1,800 38,900

    B. Variable cost (VC) per unit

    𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝐶𝑜𝑠𝑡
    Variable Cost =
    𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦

    𝑃38,900
    =
    𝑃1,800

    = P 21.61

    C. Variable cost at the highest or lowest level of activity

    Highest level = 3,000 x 21.61 = P64,830


    Lowest level = 1,200 x 21.61 =P25,932

    D. Fixed cost at each level of activity

    Highest level = P70,000 – P64,830 = P5,170


    Lowest level = P31,100 – P25,932 = P5,168

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