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

Answer 1

Answer:

Variable cost per unit = $15 per unit

Explanation:

given data

May produced = 4,000 units

May total cost = $110,000

November produced =  2,500 units

November total cost = $87,500

solution

we get here Variable cost per unit as per high-low method  that is express as

Variable cost per unit = (Highest cost - Lowest cost) ÷ ( Highest quantity produced - Lowest quantity produced)    ....................1

put here value and we will get

Variable cost per unit = $\frac{110000 - 87500}{ 4000 - 2500}$    

Variable cost per unit = $15 per unit