Wally World provided the following data concerning its costs of operating and the number of riders of its Scream ride and the related linear regression for selected operation months: Using the high-low method, what is the unit variable cost for the Scream ride?
A) $2.25
B) $2.42
C) $2.47
D) $2.60

Question

Wally World provided the following data concerning its costs of operating and the number of riders of its Scream ride and the related linear regression for selected operation months:  Using the high-low method, what is the unit variable cost for the Scream ride?
A) $2.25 
B) $2.42 
C) $2.47 
D) $2.60

Quizplus · Accepted Answer

Using January as the high activity point, and April as the low activity point, we can compute the unit variable cost as (High cost - Low cost) / (High activity - Low activity) = ($11,320 - $9,745) / (3,800 - 3,100) = $1,575 / 700 = $2.25.

Wally World Provided the Following Data Concerning Its Costs of Operating