High low Method

Step 1: Choose Highest & Lowest level of activities

hours cost
Highest 18,000 452 =8,136,000
Lowest 4,600 218 =1,002,800
Difference 4,400 132

=(18,000 x 452) - (4,600 x 218)

18,000 - 4,600
=8,136,000 - 1,002,800
13,400
=532.32

Step 2: Compute Variable Cost

Variable Cost = HAC - LAC

HAU - LAC
=

Step 3: Compute Fixed Cost

Fixed Cost = HAC - (Variable cost per unit x HAU)

=
=

Fixed Cost = LAC - (Variable cost per unit x LAU)

=

Step 4: Develop the Cost formula

Y= a + b(x)
Y =80 + 0.03 (9,100)
Y=353
Note 1 Sales -
Sales Discounts -
Sales Returns and allowances -
Net Sales -

Note 2 Beginning Inventory 200,000

Add: Purchases 3,000,000

Freight-in 30,000
Total 3,030,000
Less: Purchase Discounts 10,000

Purchase returns and allowances 20,000 3,000,000

TGAS 3,200,000
Less: Ending Inventory 280,000

Cost of sales 2,920,000

Note 3 Interest Income 10,000

Gain on Sale of Equipment 100,000
Gain from expropriation of asset 100,000
Other Income 210,000

Note 4 Rent Expense - Sales dep't 120,000

Sales Salaries 400,000
SSS premium expense - sales dep't 18,000
Philhealth premium expense - sales dep't 6,000

Pag-ibig premium expense - sales dep't 4,000

Advertising 160,000

13th month pay - sales dep't 30,000

Depreciation - store equipment 70,000

Delivery Expense 200,000

Total Distribution Costs 1,008,000

Note 5 Light, heat & water expense 320,000

Rent Expense - office 80,000
Repair & maintenance 50,000
Office/admin salaries 150,000
Taxes and Licenses 14,000
SSS premium expense - admin dep't 4,000
Philhealth premium expense - admin dep't 2,000
Pag-ibig premium expense - admin dep't 2,000

13th month pay - admin dep't 12,500

Depreciation - office equipment 40,000
Accounting & Legal Expenses 150,000
Office Expenses 250,000

General and Administrative expenses 1,074,500

Note 6 Earthquake Loss 300,000

Other Losses 300,000