Question

Brief Exercise 5-5 (Part Level Submission) Cullumber Corp. has collected the following data concerning its maintenance costs for the past 6 months. Units Produced Total Cost July 19,480 $37,769 August 34,624 51,936 September 38,952 59,510 October 23,804 41,116 November 43,280 80,609 December 41,116 67,084 (a1) Compute the variable cost per unit using the high-low method.

Answer 1

Answer:

$1.8 per unit

Explanation:

The computation of the variable cost per hour by using high low method is shown below:

Variable cost per unit = (High total cost - low total cost) ÷ (High units produced - low units produced)

= ($80,609 - $37,769) ÷ (43,280 units  - 19,480 units)

= $42,840 ÷ 23,800 units

= $1.8 per unit

By applying the above formula we can find out the variable cost per unit