Question

Knowledge Check 01 Month Tickets Sold Cost March 1,500 $ 10,000 April 2,000 $ 15,000 May 3,500 $ 19,000 June 2,500 $ 17,000 July 4,000 $ 22,000 The Movie Company has been in business for 5 months and wants to estimate its variable cost of tickets sold. Using the data from this chart and the high-low method, what is the variable cost for the Movie Company

Answer 1

Variable cost per unit= $24

Step-by-step explanation:

Giving the following information:

Month Tickets Sold Cost

March 1,500 $ 10,000

April 2,000 $ 15,000

May 3,500 $ 19,000

June 2,500 $ 17,000

July 4,000 $ 22,000

To calculate the variable cost, we need to use the following formula:

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

Variable cost per unit= (22,000 - 10,000) / (4,000 - 3,500)

Variable cost per unit= $24