Shatner Inc. has decided to use the high-low method to estimate the total cost a

Question

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 910 2,210 1,470 Total Costs $98,280 152,880 125,580 a. Determine the variable cost per unit and the total fixed cost Variable cost: (Round to the nearest dollar.) Total fixed cost: b. Based on part (a), estimate the total cost for 1,120 units of production Total cost for 1,120 units: per unit

Explanation / Answer

Variable cost=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)

=(152880-98280)/(2210-910)=$42/unit

Total fixed costs=152880-(42*2210)=$60060

Total cost for 1120 units=(1120*42)+60060=$107100

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