Answer:
Fixed costs= $4,382,800
Explanation:
Giving the following information:
3.2 million hamburgers at a total cost of $5.4 million.
5.4 million hamburgers at a total cost of $6.1 million.
<u>To calculate the fixed cost, we can use the high-low method. We will use the following formulas:</u>
Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)
Variable cost per unit= (6,100,000 - 5,400,000) / (5,400,000 - 3,200,000)
Variable cost per unit= $0.318
Fixed costs= Highest activity cost - (Variable cost per unit * HAU)
Fixed costs= 6,100,000 - (0.318*5,400,000)
Fixed costs= $4,382,800
Fixed costs= LAC - (Variable cost per unit* LAU)
Fixed costs= 5,400,000 - (0.318*3,200,000)
Fixed costs= $4,382,800
