Ponszko Nursery used high-low data from June and July to determine its variable cost of $18 per unit.Additional information follows: $\begin{array}{llr}\text { Month}&\text { Units produced }&\text {Total costs }\
\text { June } & 2,000 & \$ 48,000 \
\text { July } & 1,000 & 30,000
\end{array}$ If Ponszko's produces 2,300 units in August, how much is its total cost expected to be?
A)$12,000
B)$59,400
C)$41,400
D)$53,400

Question

Quizplus · Accepted Answer

The fixed cost is calculated using the high-low method: Fixed cost = Total cost - (Variable cost per unit * Units produced). Using June data: Fixed cost = $48,000 - ($18 * 2,000) = $12,000. For August, Total cost = Fixed cost + (Variable cost per unit * Units produced) = $12,000 + ($18 * 2,300) = $53,400.

Ponszko Nursery Used High-Low Data from June and July to Determine