The following information is available for a company's cost of sales over the last five months.
$\begin{array} { | l | l | l | }
\hline \text { Month } & \text { Units sold } & \text { Cost of sales } \
\hline \text { January } & 400 & 31,00 \
\hline \text { February } & 800 & 37,000 \
\hline \text { March } & 1,600 & 49,000 \
\hline \text { April } & 2,400 & 61,000 \
\hline
\end{array}$
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Using the high-low method, the estimated variable cost of sales per unit sold is:

Question

The following information is available for a company's cost of sales over the last five months.
 $\begin{array} { | l | l | l | } 
\hline \text { Month } & \text { Units sold } & \text { Cost of sales } \
\hline \text { January } & 400 & 31,00 \
\hline \text { February } & 800 & 37,000 \
\hline \text { March } & 1,600 & 49,000 \
\hline \text { April } & 2,400 & 61,000 \
\hline
\end{array}$
-

Using the high-low method, the estimated variable cost of sales per unit sold is:

Quizplus · Accepted Answer

The high-low method calculates the variable cost per unit by taking the difference in costs between the highest and lowest activity levels and dividing by the difference in units sold. Here, the highest cost is $61,000 for 2,400 units, and the lowest is $31,000 for 400 units. The variable cost per unit is ($61,000 - $31,000) / (2,400 - 400) = $15.00.

The Following Information Is Available for a Company's Cost of Sales