Question

Activity 2.2
1. The operating cost of Gweru Machinery Limited, a firm that produces special mining
equipment for the last six months are as follows.
Month Cost Production volume

month	cost	production volume
june	250 000	150
july	260 000	185
august	220 000	145
september	255 000	151
october	288 000	153
november	230 000	148

required
1a). Using the high-low method of cost estimation, determine the
i) total fixed cost
ii) variable cost per unit
iii) the cost function
b). What should be the cost in December when output is expected to 130 units of machinery?

Answer 1

Under high and low method

highest production month and lowest production month is considered as per this , july and august is the highest and lowest production and requirement are sold under this view.