Assignment Exercise 71: Analyzing Mixed Costs

The Education Coordinator decides that the Community College packs may be unduly influencing the high-low computation. She decides to re-run the results omitting the Community College volume.

Required

1. Using the monthly utilization information presented below, and omitting the Community College training packs, find the fixed and variable portion of costs through the high-low method. Note that the college only acquires packs in three months of the year: January, May, and September. These dates coincide with the start dates of their semesters and summer school.

2. The reason the Education Coordinator needs to know how much of the cost is fixed is because she is supposed to collect the appropriate variable cost from the Community College for their packs. For her purposes, which computation do you believe is better? Why?

Total Number of Total Community College Community College

Month Training Packs Cost Number Packs Cost January	1,000		$6,200	200		$1,240
February		200			1,820
March		250			2,350
April		400			3,440
May	700		4,900	300		2,100
June		300			2,730
July		150			1,470
August		100			1,010
September	1,100		7,150	300		1,950
October		300			2,850
November		250			2,300
December		100			1,010