Ponszko Nursery used high-low data from June and July to determine its variable cost of $12 per unit. Additional information follows: $\begin{array}{llr} \text { Month}&\text { Units produced }&\text { Total costs }\\hline
\text { June }& 2,000 & \$ 32,000 \
\text { July } & 1,000 & 20,000
\end{array}$ If Ponszko's produces 2,300 units in August, how much is its total cost expected to be?

Question

Quizplus · Accepted Answer

The variable cost per unit is $12. For 2,300 units, the variable cost is 2,300 * $12 = $27,600. The fixed cost can be determined from the high-low method: Total cost in June ($32,000) - Variable cost for 2,000 units (2,000 * $12 = $24,000) = $8,000. Therefore, the total cost for August is $27,600 (variable) + $8,000 (fixed) = $35,600.

Ponszko Nursery Used High-Low Data from June and July to Determine