Coda Corp. uses the high-low method to estimate how its costs vary with levels of production. For the year, its high production was 5,000 units in a day, at a cost of $180,000, and its low production was 4,000 units, at a cost of $160,000. Its variable cost per unit is
A) Zero
B) 10
C) 15
D) 20

Question

Quizplus · Accepted Answer

The variable cost per unit is calculated by taking the difference in total costs divided by the difference in units produced: ($180,000 - $160,000) / (5,000 - 4,000) = $20 per unit.

Coda Corp Uses the High-Low Method to Estimate How Its Costs