Compton Company is a wholesale distributor of educational CD-ROMs. The company's records indicate the following:$\begin{array}{lrr}
&\text { This Year}&\text { Last Year }\
\text { Units Sold } &250,000&200,000\
\text { Sales Revenue } & £ 1,250,000 &£ 1,000,000\
\text { Less: Cost of Goods Sold } &\underline{875,000} &\underline{ 700,000} \
\text {Gross Margin } &375,000 & 300,000 \
\text {Less: Operating Expenses } &\underline{222,000} &\underline{210,000}\
\text {Net Operating Income } &£ 153,000& £ 90,000\
\end{array}$

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Using the high-low method of analysis, what are the company's estimated variable operating expenses per unit

Question

Compton Company is a wholesale distributor of educational CD-ROMs. The company's records indicate the following:$\begin{array}{lrr}
&\text { This Year}&\text { Last Year }\
  \text { Units Sold } &250,000&200,000\
 \text { Sales Revenue } & £ 1,250,000 &£ 1,000,000\
 \text { Less: Cost of Goods Sold } &\underline{875,000} &\underline{ 700,000} \
 \text {Gross Margin  } &375,000 & 300,000 \
 \text {Less: Operating Expenses  } &\underline{222,000} &\underline{210,000}\
 \text {Net Operating Income  } &£ 153,000& £ 90,000\
\end{array}$

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Using the high-low method of analysis, what are the company's estimated variable operating expenses per unit

Quizplus · Accepted Answer

The variable operating expenses per unit is calculated as the change in operating expenses divided by the change in units sold. In this case, the change in operating expenses is £222,000 - £210,000 = £12,000, and the change in units sold is 250,000 - 200,000 = 50,000. Therefore, the variable operating expenses per unit is £12,000 / 50,000 = £0.24.

Compton Company Is a Wholesale Distributor of Educational CD-ROMs - Using the High-Low Method of Analysis, What Are the Company's

Compton Company Is a Wholesale Distributor of Educational CD-ROMs -
Using the High-Low Method of Analysis, What Are the Company's