Question

A distribution center incurred the following handling cost:

For 15,000 items packaged: $65,506

For 11,000 items packaged: $48,866

Using the high-low method and rounding to the nearest cent, the variable cost per item packaged is:

A. $4.44

B. $4.16

C. $0.73

D. $4.37

E. $1.36

Please show work, thank you.

Answer 1

Correct answer----------(B) $4.16

Working

		Cost	No. of activities
A	High Level	$          65,506.00	15000
B	Low Level	$          48,866.00	11000
C=A-B	Difference	$          16,640.00	$              4,000.00
A	Cost difference	$          16,640.00
B	No. of activities difference	4000
C=A/B	Variable cost per unit	$ 4.16