Total costs were $38,400 when 16,000 units were produced and $41,100 when 17,200 units were produced.If the high-low method is used, how much are estimated total costs for a production level of 17,100 units?

Question

Quizplus · Accepted Answer

The high-low method calculates the variable cost per unit and fixed costs. The variable cost per unit is ($41,100 - $38,400) / (17,200 - 16,000) = $2.25. Fixed costs are calculated using one of the points: $38,400 - (16,000 * $2.25) = $2,400. Estimated total costs for 17,100 units are $2,400 + (17,100 * $2.25) = $40,875.

Total Costs Were $38,400 When 16,000 Units Were Produced and $41,100