Answer:
a. $175.50 and $11,060,000
b. $31,242,500
Explanation:
The computation of the fixed cost and the variable cost per unit by using high low method is shown below:
Variable cost per units = (High total cost - low total cost) ÷ (High units produced - low units produced)
= ($32,120,000- $25,100,000) ÷ (120,000 units - 80,000 units)
= $7,020,000 ÷ 40,000 units
= $175.50
Now the fixed cost equal to
= High total cost - (High units produced × Variable cost per unit)
= $32,120,000 - (120,000 units × $175.50)
= $32,120,000 - $21,060,000
= $11,060,000
Now the estimated total cost is would be
= Fixed cost + expected units of production × variable cost per unit
= $11,060,000 + 115,000 units × $175.50
= $11,060,000 + $20,182,500
= $31,242,500
