(Appendix 5A) Inspection costs at one of Ratulowski Corporation's factories are listed below:
Management believes that inspection cost is a mixed cost that depends on units produced.
-Using the high-low method,the estimate of the variable component of inspection cost per unit produced is closest to:
A) $8.14
B) $7.05
C) $0.12
D) $12.89

Question

(Appendix 5A) Inspection costs at one of Ratulowski Corporation's factories are listed below:
  Management believes that inspection cost is a mixed cost that depends on units produced.
-Using the high-low method,the estimate of the variable component of inspection cost per unit produced is closest to:
A) $8.14 
B) $7.05 
C) $0.12 
D) $12.89

Quizplus · Accepted Answer

11ea7761_1889_5e42_81a5_334baf6722f9_TB2580_00 Variable cost per unit = Change in cost ÷ Change in activity
= $619 ÷ 76 units
= $8.14 per unit

(Appendix 5A) Inspection Costs at One of Ratulowski Corporation's Factories