Ranger Pressure Cleaners has total monthly costs of $5,800 when 3,200 units are produced and $6,425 when 3,700 units are produced.If the high-low method is used, how much is the estimated total monthly fixed cost?

Question

Quizplus · Accepted Answer

The high-low method calculates variable cost per unit as (6425-5800)/(3700-3200) = $1.25. Fixed cost is then calculated using total cost = fixed cost + (variable cost per unit * units). Using the lower point: 5800 = fixed cost + (1.25 * 3200), fixed cost = $1,800.

Ranger Pressure Cleaners Has Total Monthly Costs of $5,800 When