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

Question

Quizplus · Accepted Answer

The fixed cost is calculated using the high-low method: Total cost = Fixed cost + (Variable cost per unit * Units produced). Using June data: $32,000 = Fixed cost + ($12 * 2,000). Fixed cost = $8,000. For August: Total cost = $8,000 + ($12 * 2,300) = $35,600.

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