Question

The ABC Company had its highest level of production in May when they produced 4,000 units at a total cost of $110,000 and its lowest level of production in November when they produced 2,500 units at a total cost of $87,500.

A. Using the high-low method, the estimated variable cost per unit is $ __________ .

Answer 1

$15 per Unit

Step-by-step explanation:

Given:

Highest unit = 4,000

Total cost for higher unit = $110,000

Lowest unit = 2,500

Total cost for lower unit = $87,500

Computation by High-low method

= (Total cost for higher unit - Total cost for lower unit) / (Highest unit - Lowest nit)

( $110,000 - $87,500) / ( 4,000 – 2,500)

[$22,500 / 1,500]per unit

= $15 Per Unit