Question

Use the following data and the high-low method to determine the variable costs per unit.

Month	Units	Total Costs
January	1000	$ 45,550.00
February	1500	$ 52,000.00
March	2100	$ 61,500.00
April	1800	$ 62,000.00
May	750	$ 41,250.00

a. $15

B $22.50

C. $7.40

D. 15.25

Answer 1

Correct answer------------a. $15

Working

		Cost	No. of activities
A	High Level	$          61,500.00	2100
B	Low Level	$          41,250.00	750
C=A-B	Difference	$          20,250.00	1,350
A	Cost difference	$          20,250.00
B	No. of activities difference	1350
C=A/B	Variable cost per unit	$                   15.00