Resolve using this format:

1. High-low method Units Cost High volume Low volume Change Variable cost per unit: = $______________per unit

Fixed cost 1,400 Units 2,400 Units

Total cost Variable cost, $ per unit Fixed cost

2. Variable cost charged to product: units $ per unit = $__________________________.

3. Fixed cost charged to factory overhead: $ per month 12 months = $__________________.

P4-2 LO2 Variable and fixed cost analysis; high-low method Miller Minerals Co. manufactures a product that requires the use of a considerable amount of natural gas to heat it to a desired tem- perature. The process requires a constant level of heat, so the fur- naces are maintained at a set temperature for 24 hours a day. Although units are not continuously processed, management desires that the variable cost be charged directly to the product and the fixed cost to the factory overhead. The following data have been collected for the year: Units Units Cost 2,400 January... February March Cost $4,400 4,300 2,200 4,400 4,100 2,100 2,300 2,200 July .... August... September. October ... 2,000 3,800 4,200 4,000 2,000 1,400 3,450 April May.. June 1,800 3,800 3,700 November December.. 1,900 1,800 1,900 3,900 4,050 Required: 1. Separate the variable and fixed elements, using the high-low method. 2. Determine the variable cost to be charged to the product for the year. (Hint. First determine the number of annual units produced.) 3. Determine the fixed cost to be charged to factory overhead for the year