Harris Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $84.40 per unit. The best estimate of the total variable cost per unit is:
A)$77.00
B)$57.00
C)$69.50
D)$78.50

Question

Harris Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $84.40 per unit.  The best estimate of the total variable cost per unit is:
A)$77.00 
B)$57.00 
C)$69.50 
D)$78.50

Quizplus · Accepted Answer

Using the High-Low method, we can calculate the variable cost per unit as follows:

Variable cost per unit = (Total cost at high sales volume - Total cost at low sales volume) / (High sales volume - Low sales volume)

Variable cost per unit = (($284,520 - $153,000) / (6,000 - 3,000))

Variable cost per unit = $69.50

Therefore, the best estimate of the total variable cost per unit is $69.50. Option C is the correct answer.

Harris Corporation Is a Wholesaler That Sells a Single Product