Total costs for Watson & Company at 100,000 units are $350,000,while total fixed costs are $150,000.The total variable costs at a level of 200,000 units would be:
A)$700,000.
B)$175,000.
C)$400,000.
D)$300,000.

Question

Quizplus · Accepted Answer

We can use the high-low method to find the variable cost per unit:
Total cost at 100,000 units = $350,000
Total cost at 0 units (fixed costs only) = $150,000
Variable cost per unit = (Total cost at 100,000 units - Total cost at 0 units) / (100,000 units - 0 units) = ($350,000 - $150,000) / 100,000 = $2 per unit
Using the variable cost per unit, we can find the total variable costs at 200,000 units:
Total variable costs at 200,000 units = Variable cost per unit x Number of units = $2 x 200,000 = $400,000

Total Costs for Watson & Company at 100,000 Units Are