Determining the Total Cost Formula (Total Cost = Fixed cost + (variable cost per unit x activity level)

$_______________ = per unit

___________Units

The fixed cost at any given level of activity can now be estimated. By selecting either the high or the low set of data and using the previously calculated variable cost per unit of billable data in the formula for a straight line — Y = fc + (vc x Units), where fc is fixed costs and vc is variable cost per unit — the total fixed costs can be determined.

Fixed Cost = Total cost – (variable cost per unit x activity level)

Highest level (1,700 units)

Fixed Cost = $__________ – ($________ per unit x 1,700)

Fixed Cost = $__________

Lowest level (800 units)

Fixed Cost = $__________ – ($________ per unit x 800)

Fixed Cost = $__________

Now that the fixed and variable cost elements are known, determine the formula that mathematically displays the calculation of total cost with mixed cost elements.

Total Cost = $_________ + ($__________ x Activity Level)

After determining the formula for total cost, calculate what the total cost would be if the company were to have an activity level of 1,500 units.

Total Cost = $________ + ($________ x 1,500)

= $__________

 

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