The following information is available for electricity costs for the last six months of the year:
$$\begin{array} { l c c }
\text { Month } & \text { Production Volume } & \text { Electricity Costs } \
\hline\text { July } & 1,400 & \$ 2,200 \
\text { August } & 2,800 & 5,400 \
\text { September } & 3,200 & 5,700 \
\text { October } & 1,750 & 3,900 \
\text { November } & 1,200 & 2,400 \
\text { December } & 2,100 & 4.050
\end{array}$$
-Refer to the figure.Using the high-low method,what is the estimated variable cost per unit of production?
A)$1.26
B)$1.53
C)$1.65
D)$1.75

Question

The following information is available for electricity costs for the last six months of the year:
$$\begin{array} { l c c } 
\text { Month } & \text { Production Volume } & \text { Electricity Costs } \
\hline\text { July } & 1,400 & \$ 2,200 \
\text { August } & 2,800 & 5,400 \
\text { September } & 3,200 & 5,700 \
\text { October } & 1,750 & 3,900 \
\text { November } & 1,200 & 2,400 \
\text { December } & 2,100 & 4.050
\end{array}$$
-Refer to the figure.Using the high-low method,what is the estimated variable cost per unit of production?
A)$1.26
B)$1.53
C)$1.65
D)$1.75

Quizplus · Accepted Answer

The high-low method uses the highest and lowest activity levels to estimate variable costs. The highest production volume is 3,200 units with a cost of $5,700, and the lowest is 1,200 units with a cost of $2,400. The variable cost per unit is calculated as: (5,700 - 2,400) / (3,200 - 1,200) = $1.65.

The Following Information Is Available for Electricity Costs for the Last