Question

The following information is available for electricity costs for the last six months of the year: Month Production Volume Electricity Costs February 1,000 $1,700 March 2,200 4,000 April 2,000 3,200 May 1,630 3,100 June 1,240 2,600 July 1,340 3,020 Using the high-low method, what is the estimated variable cost per unit of production? (Round your answer to two decimal places.) a.1.92 b.1.37 c.1.75 d.1.53

Answer 1

The correct answer is A.

Step-by-step explanation:

Giving the following information:

February 1,000 $1,700

March 2,200 $4,000

April 2,000 $3,200

May 1,630 $3,100

June 1,240 $2,600

July 1,340 $3,020

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (highest activity units - Lowest activity units)

Variable cost per unit= (4,000 - 1,700) / (2,200 - 1,000)= $1.92