If a firm has relatively high fixed costs compared with variable costs we can say the firm

a.

has high operating gearing

 

 

b.

has a low margin of safety
 

 

 

c.

has a high margin of safety

 

 

d.

is inefficient

 

 

The following information applies to questions 32 and 33

Klopi Limited manufactures toasters with a selling price of $179. The following financial information was obtained on manufacturing costs for the last six months:

 

Month	Units sold	Manufacturing costs ($ thousands)
May 2020	240	40.2
June 2020	200	36.8
July 2020	240	42.2
August 2020	280	44.3
September 2020	360	54.4
October 2020	320	51.3

 

 

 

Question 32 (2 marks):

Estimate the variable manufacturing cost per toaster, based on the high-low method.
 

 

Question 33 (2 marks):

Estimate the fixed manufacturing cost per month, based on the high-low method.