Question

The manager of Quick Car Inspection reviewed the monthly operating costs for the past year. The costs ranged from $4,400 for 1,400 inspections to $4,200 for 1,000 inspections. Please use the high-low method to calculate the variable cost per inspection.

Answer 1

Answer:

Variable cost per unit= $0.5 per inspection

Explanation:

Giving the following information:

The costs ranged from $4,400 for 1,400 inspections to $4,200 for 1,000 inspections.

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= (4,400 - 4,200) / (1,400 - 1,000)

Variable cost per unit= $0.5 per inspection