Callis Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $141.60 per unit. The best estimate of the total variable cost per unit is:
A)$131.80
B)$53.10
C)$66.40
D)$120.90

Question

Callis Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $141.60 per unit.  The best estimate of the total variable cost per unit is:
A)$131.80 
B)$53.10 
C)$66.40 
D)$120.90

Quizplus · Accepted Answer

Using the high-low method, we can calculate the variable cost per unit as follows:

Variable Cost Per Unit = (Total Cost at High Sales - Total Cost at Low Sales)/(High Sales Volume - Low Sales Volume)

Variable Cost Per Unit = ($20,720 - $7,904)/(400 - 200)

Variable Cost Per Unit = $12,816/200

Variable Cost Per Unit = $64.08

Therefore, the best estimate of the total variable cost per unit is $66.40, which is closest to option C.

Callis Corporation Is a Wholesaler That Sells a Single Product