Problem-
Oregon Manufacturing had the following data for the past three months.
|
|
January
|
February
|
March
|
|
Sales in units
|
3000
|
3,750
|
4,500
|
|
Operating expenses
|
$272,000
|
$296,000
|
$320,000
|
- Using the high-low method, estimate Oregon's total fixed costs, contribution margin ratio and break-even point in sales dollars for April. Oregon expects to sell 5,000 units for $50 per unit (this sales price is unchanged from month to month).
- Project net income for April, given the information above and your computations.
- Discuss strengths and weaknesses of applying the high-low method. Feel free to use the information provided above in your discussion. How could your analysis of costs be improved?
Additional information
The problem belongs to Accounting and it discusses about estimate of total fixed costs, contribution margin ratio and break-even point in sales, project net income, etc using high-low method.