Question

The manufacturing costs of Mocha Industries for three months of the year are as follows: Total Cost Production April $60,226 1,310 Units May 62,618 1,830 June 66,436 2,660 a. Using the high-low method, determine the variable cost per unit. Round your answer to two decimal places. $ per unit

Answer 1

Answer:

Variable cost per unit = $4.60

Explanation:

To calculate the element of variable cost in a mix cost using high-low method, we need to take the cost of the highest activity level and subtract the cost of the lowest activity level from it and divide the answer by the difference between the highest and the lowest activity levels.

High-low method

• Variable cost per unit = (Highest Activity Cost - Lowest Activity Cost) / (Highest Activity Units - Lowest Activity Units)

• Variable cost per unit = (66436 - 60226) / (2660 - 1310) = $4.60 per unit