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Shatner Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the total cost. The data for various levels of production are as follows:

unit produced total costs

7500 600000
12500 725000
20000 800000



1.Determine the variable cost per unit and the fixed cost.

Variable cost: ___________
(Round to nearest dollar.) _____________ $ per unit
Total fixed cost: $ ____________.

2. Based on part 1, estimate the total cost for 10,000 units of production.
Total cost for 10,000 units: $ _____________.

Explanation / Answer

(80,000-60,000)/ (20,000-7,500)= 1.60 is variable cost or 2.00 per unit to nearest $ 80,000= 2.00 * 20,000 +FC FC= 80,000-32,000= 40,000 is fixed cost. 2. Based on part i 10,000 units *2 +40,000= 60,000

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