eBook ? Show Me How Calculator High-Low Method Shatner Inc, has decided to use t

Question

eBook ? Show Me How Calculator High-Low Method 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: Units Produced 1,700 3,130 5,100 Total Costs $324,360 480,770 504,560 a. Determine the variable cost per unit and the total fixed cost. Variable cost: (Round to the nearest dollar.) per unit Total fixed cost: ?) b. Based on part (a), estimate the total cost for 2,450 units of production. Total cost for 2,450 units:

Explanation / Answer

a) Variable cost per unit = Change in cost/change in unit

                                        = (504560-324360)/(5100-1700)

Variable cost per unit = 53 per unit

Fixed cost = 504560-(5100*53) = 234260

b) Total cost on 2450 units = 234260+(2450*53) = 364110

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