The following data relating to units shipped and total shipp

The following data relating to units shipped and total shipping expense have been assembled by Archer Company, a manufacturer of large, custom-built air-conditioning units for commercial buildings:

Certennial College The following data relating to units shipped and total shipping expense have been assembled by Archer Company, a manufacturer of large, custom-built air conditioning units for commercial buildings January February March April May June July $ 6,000 3,500 4,300 2,550 3,700 9,250 1,600 19 Required: 1. Estimate a cosf tormula for shipping expense using the high-low method de 2. Not available in Connect expense? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect. 3. What factors, other than the number of units shipped, are likely to affect the company\'s total shipping weight of the units shipped a Distance travelled 2l Number of workers used to manufacture the goods shipped zl Size of the units shipped Fixed costs to produce the units

Solution

Answer

Month

Unit Shipped

Total Shipping expense

High Level

June

19

$              9,250.00

Low Level

July

2

$              1,600.00

Difference

17

$              7,650.00

--- Calculation of Variable expense per unit [Value of ‘b’]

A

Difference between Total Shipping expense

$             7,650.00

B

Difference between Units shipped

17

C = A/B

Variable cost per unit

$                 450.00 per unit

---Calculation of Total FIXED shipping expense [Value of ‘a’]

High LeveL

Low Level

A

Total Shipping cost

$             9,250.00

$                       1,600.00

B

Units shipped

19

2

C

Variable cost per unit

$                 450.00

$                           450.00

D = B x C

Total VARIABLE shipping expense

$             8,550.00

$                           900.00

E = A - D

Total FIXED shipping expense

$                 700.00

$                           700.00

Y = $ 700 + $450X

Other factors would be:

---Weight of units shipped
---Distance travelled
---Size of the units shipped

	Month	Unit Shipped	Total Shipping expense
High Level	June	19	$              9,250.00
Low Level	July	2	$              1,600.00
	Difference	17	$              7,650.00