Lancer Audio produces a high-end DVD player that sells for $1,300.Total operating expenses for the past 12
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Required
a. Use the high-low method to estimate fixed and variable costs.
b. Based on these estimates, calculate the break-even level of sales in units. (Round to the nearest whole unit.)
c. Calculate the margin of safety for the coming August assuming estimated sales of 165 units.
d. Estimate total profit assuming production and sales of 165 units.
e. Comment on the limitations of the high-low method in estimating costs for LancerAudio.
Transcribed Image Text:
August September October November December January February March Units Produced and Sold 130 150 155 165 170 145 150 140 135 140 150 145 Cost $116,990 130,650 133,790 140,345 143,910 127,670 129,865 122,720 120,255 123,520 130,950 127,385 May June July
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a Production Cost High 170 143910 Low 130 116990 40 26...View the full answer
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