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What is variable expense?? fixed shipping expense is correct *note* variable expense is not $25 or...

Question

What is variable expense?? fixed shipping expense is correct *note* variable expense is not $25 or...
what is variable expense??
fixed shipping expense is correct
*note* variable expense is not $25 or $250
pter 6 Graded Homework i Required information [The following information applies to the questions displayed below.] commercia
pter 6 Graded Homework i Required information [The following information applies to the questions displayed below.] commercial Archer Company is a wholesaler of custom-built air-conditioning units for monthly data relating to units shipped and total shipping expense: buildings. It gathered the following Units Shipped Month January February March April May June July Total Shipping Expense $ 1,800 $ 2.300 $1,700 $ 2, eee $ 2,300 $ 2,700 $ 1,200 2. Using the high-low method, estimate the cost formula for shipping expense. s Variable shipping expense Fixed shipping expense 25 per unit 700 per month $

Answers

Units shipped Total shipping expense
High level of activity ( June ) 8 2700
(-) Low level of activity ( July ) 2 1200
Difference 6 1500
Variable shipping expense = Difference in total shipping expense / Difference in units shipped = 1500 / 6 250 per unit
Now let us calculate the fixed shipping expense from the June data
Total shipping expense = ( Variable shipping expense per unit * Units shipped ) + Fixed shipping expense
2700 = ( 250 * 8 ) + Fixed shipping expense
2700 = 2000 + Fixed shipping expense
Fixed shipping expense = 2700 - 2000 700 per month

Note: If 700 answer for fixed shipping expense is correct then variable shipping expense must be 250 per unit.

If you have any doubt then please ask.


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