Anthony Company's highest point of total cost was $80,000 in June.Their point of lowest cost was $55,000 in December.The company makes a single product.Production volume in June was 16,000 units; production volume in December was 8000 units.What is the variable cost per unit?

Question

Quizplus · Accepted Answer

We can use the high-low method to calculate the variable cost per unit:

Variable cost per unit = (Total cost at highest point - Total cost at lowest point) / (Production volume at highest point - Production volume at lowest point)
Variable cost per unit = ($80,000 - $55,000) / (16,000 - 8,000)
Variable cost per unit = $25,000 / 8,000
Variable cost per unit = $3.13

Therefore, the variable cost per unit is $3.13, which is option D.

Anthony Company's Highest Point of Total Cost Was $80,000 in June.Their