Question

Wildhorse Company accumulates the following data concerning a mixed cost, using miles as the activity level. Miles Driven Total Cost Miles Driven Total Cost January 8,000 $14,120 March 8,550 $14,979 February 7,490 13,495 April 8,195 14,490 Collapse question part (a1) Compute the variable cost per mile using the high-low method. (Round answer to 2 decimal places, e.g. 2.25.) Variable cost per mile $

Answer 1

Answer:

Variable cost per unit= $1.4 per unit

Explanation:

Giving the following information:

Miles Driven Total Cost Miles Driven Total Cost

January: 8,000 $14,120

March: 8,550 $14,979

February: 7,490 $13,495

April: 8,195 $14,490

To calculate the variable cost under the high-low method, we need to use the following formula:

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (14,979 - 13,495) / (8,550 - 7,490)

Variable cost per unit= $1.4 per unit