Presented below is the production data for the last six months of the year for the mixed costs incurred by Vignovich Company.
Vignovich Company uses the high-low method to analyze mixed costs.
-The variable cost per unit is
A) $3.06.
B) $2.80.
C) $0.36.
D) $0.33.

Question

Presented below is the production data for the last six months of the year for the mixed costs incurred by Vignovich Company.
  Vignovich Company uses the high-low method to analyze mixed costs.
-The variable cost per unit is
A) $3.06. 
B) $2.80. 
C) $0.36. 
D) $0.33.

Quizplus · Accepted Answer

Using the high-low method, we need to find the highest and lowest levels of activity and their respective costs.

The highest level of activity occurred in June with 8,500 units, and the total cost was $32,300. The lowest level of activity occurred in May with 4,500 units, and the total cost was $20,000.

Therefore, the change in cost is $32,300 - $20,000 = $12,300, and the change in activity is 8,500 - 4,500 = 4,000 units.

The variable cost per unit can be calculated as:

Variable cost per unit = Change in cost / Change in activity
Variable cost per unit = $12,300 / 4,000 units
Variable cost per unit = $3.07

Therefore, the variable cost per unit is $2.80 (rounded to the nearest cent), which is the closest answer choice.

Presented Below Is the Production Data for the Last Six