Week 1 formulas (Cost Behavior)

Question 1

Variable cost per unit (high low method) equation:

Answer 1

variable cost per unit (high low method) =
change in cost for 2 data points / change in activity level for 2 data points

Question 2

Total fixed cost equation:

Answer 2

total fixed cost =
variable cost + fixed cost

Question 3

Contribution income statement:

Answer 3

contribution income statement parts =
sales revenue < variable costs > = contribution margin < fixed cost > = net income